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Dr. B. R. AMBEDKAR 
OPEN UNIVERSITY 




Dr. B. R. AMBEDKAR 
OPEN UNIVERSITY 

LIBRARY 

HYDERABAD-500033 



Dr. B. R. AMBEDKAR OPEN UNIVERSITY 
LIBRARY 



^ 'J 
CallNo. ,-*- 



Access/on No. /O - / V^ 3 



Author; 

TWe ; C ' C M t o t. 






A<M 



This book should be returned on or before the date 
last marked below. 



V. P WAPT A 



THE COMING STRUGGLE FOR FOWER 



THE COMING STRUGGLE 
FOR POWER 

by 
John Strachey 




LONDON 

VICTOR GOLLANCZ LTD 

14 Henrietta Street Covent Garden 

1932 



. R.NARLA;- 



Printed in Great Britain by 
The Camelot Free* Ltd** London and Southampton. 



CONTENTS 

Preface , page 7 

PART I 
THE BIRTH OF CAPITALISM 

I. The Struggle for the Market .... 11 
II. Capitalism and the Market .... 32 

PART II 
CAPITALISM TO-DAY 

III. Monopoly ....... 53 

IV. Nationalism ....... 68 

V. Unstable Money ...... 88 

VI. Capitalist Crisis ...... 108 

VII. Back to the Market ? 131 

PART III 
THE DECAY OF ^CAPITALIST CULTURE 

VIII. Religion 155 

IX. Science ........ 173 

X. Literature (i.) . . . . . . .186 

XI. Literature (ii.) ...... 208 

PART IV 
THE FUTURE OF CAPITALISM 

XII. Imperialism ....... 231 

XIII, The Goal of Monopoly 246 

XIV. Fascism *. .261 



6 CONTENTS 

PART V 
THE POLITICAL STRUGGLE IN BRITAIN 

XV. An Empire on the Defensive : the Role of Mr. 

Baldwin page 278 

XVI. The Nature of Social Democracy . . .298 

XVII. Mr. MacDonald and the 1931 Crisis in Britain . 808 

XVIII. The Future of Social Democracy . . .828 



PART VI 
COMMUNISM 

XIX. The Nature of Communism .... 841 

XX. The Future of Great Britain . . . .860 

XXI. The Salvation of the British People . . .884 



Index 897 



PREFACE 

THIS book attempts to combine an economic and social analysis 
of capitalism with a description, based on my experiences in 
British politics, of the methods by which the system is to-day 
maintained. For example, the book includes on the one hand 
discussion of current monetary theories, and on the other an 
estimate of the respective roles in world affairs of the Con- 
servative and Labour parties of Great Britain. For there can 
surely be little doubt that an attempt thus to combine an 
analysis of theory and a description of practice is by far the 
most fruitful method of discussing the contemporary situation. 

In these pages, the reader will find no mention of the part 
played by their author in the political events which are dis- 
cussed. But it is perhaps necessary to say a word of comment 
upon a political career which, though of little interest to any- 
one except myself, has been devoid neither of incident nor 
variety. I believe that no excuse is either possible or is, for that 
matter, necessary, for the mistakes, waverings and contradic- 
tions of my political past. For he who supposes that an English- 
man of the present day can find his way either to intellectual 
certainty or political consistency, without doubts, hesitations 
and errors, shows little appreciation of the gravity or the com- 
plexity of the present situation. 

Many of these pages contain evidence of the road along which 
\I have travelled. Indeed, the reader will see at once that the 
argument of this book follows the course of its author's transi- 
tion from old views to new. And it may well be that any value 
which it possesses will depend to some extent on precisely this 
fact. For this method of approach to an intellectual position 
unfamiliar to most Englishmen may prove useful as an intro- 
duction to the subject. 

For this reason, if there should be any Marxist or communist 
readers of this book, I should desire to make it clear to them 
at the outset that it does not profess to be a scientific, still less 
an authoritative, exposition of communist views. The book is 
the result of the participation in, and the observation of, British 
politics, during the last ten years, combined with such economic 
and historical information as I have been able to acquire* 

v, ft. KARL A 



PART I 
THE BIRTH OF CAPITALISM 



V. R. NARLA 

CHAPTER I 
The Struggle for the Market 

THE capitalist system could not develop until the market was 
established. 

"Socialism," defines Mr. R. G. Hawtrey of the British 
Treasury, " is a solution of the economic problem based upon 
the authority of the State instead of upon the motives of the 
market." Entirely inadequate in his definition of socialism, 
the eminent British official is more penetrating in his implied 
description of capitalism. Thus the converse of his original 
proposition would be more accurate. We might define capitalism) 
as " a system which attempts a solution of the economic problem 
by reliance on the motives of the market." This definition is 
still, however, imperfect. For, although the Existence of the 
market is unquestionably essential to capitalism, it is to-day, 
as much of this book will be devoted to showing, no longer 
the most characteristic feature of the system. Nevertheless, the 
economists are right when they tell us that the free market, 
the establishment of the principle, that is, that money can buy 
what it likes, how, when and where it likes, was the essential 
prerequisite of the capitalist system. And the best proof of 
this fact is not to be found in any analysis, however refined and 
subtle, of society as it exists, but in the history of how this 
society arose. 

Men become fully conscious of what they have done only 
some centuries after they have done it. And only lately has 
it been realized that what Western man accomplished by some 
four hundred years of struggle, between the fifteenth and the 
nineteenth centuries, was the establishment of the free market. 

So natural to us is the existence of the market that we find 
it hard to grasp the fact that there was a time, not so very long 
ago, when there was no market. We are familiar with the idea 
of feudalism. Yet webften fail to realize the essential fact 
about feudalism, the fact that you did not in the middle ages 
(and do not to-day wherever feudalism still exists) live by buying 
and selling. Again we learn from our historians of the struggle 
for "freedom." British historians especially regard modern 



12 THE COMING STRUGGLE FOR POWER* 

history as nothing less than the story of some great liberation. 
They do not, however, tell us for what purpose this freedom 
was won. And yet^ there is no doubt about it. The freedom for 
which Hqnry Tudor broke with Rome, for which Hampden and 
.Cromwell fought, for which Halifax and Churchill betrayed 
James, which Locke began to make conscious, for the sake of 
which Jefferson and Washington defeated George III, and for 
which Grey reformed, was the freedom to buy and to sell. 
The whole long struggle for Liberty, about which the hist- 
orians tell us everything except what it accomplished, was a 
struggle for that freedom of contract, which is the legal ex- 
pression of the free market. 

Undoubtedly, that struggle began long before men were 
fully conscious that the free market was to be the result of their 
.efforts. Thomas Cromwell did not anticipate Adam Smith. 
Men do battle for immediate ends. Gradually, however, the 
consciousness of the object of their struggle dawned upon those 
who took part in it. If the object of Thomas Cromwell was 
simply the aggrandisement of his friends, and the destruction of 
monopoly but a means to that end, his great great nephew 
Oliver had already begun to know better. And by the end of 
the eighteenth century Jefferson and Paine knew very well 
for what they fought. 

It is at length beginning to be admitted that this struggle 
and nothing else is what European history since the Reformation 
has been about. Not that the contest was confined to the eco- 
nomic field. On the contrary, it spread to every aspect of 
human consciousness. For its object was nothing less than to 
create a complete new basis for human life. Consequently it 
had first of all to supplant the extant form of society, on the 
basis of which men had hitherto existed. We call that previous 
social system feudalism. Now feudalism was an elaborate system 
of human relations, which had been in existence for several 
centuries and possessed a highly developed and elaborate 
equipment of political, aesthetic and religious institutions and 
ideas. During long centuries men had learnt just how it was 
necessary to liye (that is, to act, to feel and to think) under the 
conditions of those times. And these conditions were those of 
communities in which agricultural production was by far the 



THE STRUGGLE FOR THE MARKET 18 

most important economic activity ; in which the possibilities 
of transport, even for a few miles, were so limited that the 
importance which the exchange of commodities (the market) 
could possibly have was very small ; in which the methods of 
production, and of such distribution as there was, were simple 
handicraft ; in which, above all, these methods changed very 
little. 

And yet the methods of production did change. The scholars 
now inform us that as early as the twelfth century the germs 
of change can be detected. In fact, of course, feudalism was 
never completely and perfectly established in practice. Long 
before any of the numerous systems of society under which man 
has lived have been fully established, the signs that they will 
some day themselves be superseded become visible. As the slow 
centuries of the middle ages wore on, the cultivation of the soil 
became more rational, methods of transport improved, roads 
grew a little more passable, ships a little more seaworthy. At 
length (some time about 1400) the possibility, the actual phys- 
ical possibility, of the exchange of goods on the great scale, 
the possibility of the market, became considerable. 1 But that 
did not mean that the modern free market was forthwith es- 
tablished. On the contrary, deep-rooted and formidable insti- 
tutions, fixed ideas, religious, political and social, all perforce 
founded on the impossibility of the market, stood flatly in the 
way. Accordingly they had to be, and were, dynamited out of 
the way. It took, however, some four centuries to do it. The 
stormy life of Europe in these latter centuries has been the his- 
tory of the process. For once it had started, the pace of change 
quickened decade by decade. No sooner had human institutions? 
been adapted so as to admit of the possibility of a market of 
a given economic importance, itself made possible by previous 
technical developments, than these technical developments 

1 By an exchange of goods " on the great scale," is implied such thing* aa the 
existence of whole communities, maintained by means of foodstuffs brought 
from a distance and exchanged for, say, an important raw material, or for manu- 
factured goods. Isolated examittes of such a condition of things may be found 
in antiquity and in the middle ages around the shores of the Mediterranean, 
because bulk transport by coasting vessels which never went out of sight of land 
was possible on the waters of that inland sea in even very primitive vessels, and 
before the principles of navigation were discovered. Elsewhere, as in the great 
mediaeval fairs for example, there were exchanges of goods brought from, % 
distance, but they certainly could not be the baau of life. 



14 THE COMING STRUGGLE FOR POWER 

> 

themselves made another and far longer stride forward^ so that 
almost before they were properly established each new set of 
human institutions became out of date. For history in an epoch 
of rapid technical and economic change is no smoothly flowing 
river. 

In modern Europe it has been rather a river of blood. For 
the sword and the sword alone has sufficed to cut through and 
break up the old social forms and make room for the new. 
Swords, however, need arms to wield them. The free market 
did not establish itself. It needed human instruments to fight 
for it. And these instruments could only be the new men whose 
lives had come to depend on the existence of the young market ; 
these new men were the merchants, the " middle " men. For 
why should feudal lord, feudal serf, or established urban guilds- 
man, fight for the market ? These new men, however middle 
men half way between lord and serf, who slowly grew in num- 
ber and in power with the insidiously growing market, they could 
fight for the market, they could and they did so fight even 
though at the beginning they did not know for what they fought. 
They fought it seemed to them merely for the right to live. 
But their right to live had become dependent upon the main- 
tenance and the growth of the market. Thus when they fought 
Jor themselves they could not help fighting for the market. 
Small wonder then that they grappled desperately with every 
interest which their instincts told them was hostile to the 
principle of free exchange. 1 

This book has no direct concern with the early history of 
the market. Our only concern is to note that the market has a 
history : that it is not a " natural " condition of affairs ordained 
from heaven, from everlasting to everlasting. On the contrary, 
the market is an artificial human institution, established by five 
centuries of embittered and sanguinary struggles on the part 
of the nascent middle classes of Europe. This vast " war " 
extending in time over several centuries, and in space over the 
whole of Christendom, culminated, it is now recognised, in three 
violent and obdurate engagements. These were the Reforma* 
tion, which in Germany and England breached the smooth, 

'Not that the merchants did much of tfee fighting in person ; they used their 
to get others to fight for 



THE STRUGGLE FR THE MARKET 15 

unscalable wall of Roman Catholicism ; the English Rebellion 
of 1640 and Revolution of 1688, which for the first time gave 
the middle class political power in a great state ; and the 
French Revolution, which finally broke the back of European 
feudalism. 

The first of these pitched battles for the market occurred 
on the apparently distant and unrelated field of religious belief. 
When the clash came, the new " middle " men of the Refor- 
mation had already up to a certain point established their 
markets. The first marked technical revolution had taken place. 
Navigation had suddenly bounded forward. Agricultural prac- 
tice (because, it is suggested, of the shortage of labour after the 
Black Death) had improved. It had been discovered that both} 
food and wool, the two staple products, could be produced and 
distributed with a smaller expenditure of human labour than 
formerly. Above all the improvement in transport by water 
made the exchange in bulk of these staples for the first time 
profitable. Up till then the impossibility of transport had 
confined exchange to luxury articles (such as spices, silks, 
jewels) with a very high value in proportion to their weight 
and bulk. 1 

With the improvement in navigation the specialized pro- 
duction of staples at a distance from their market became 
possible and profitable. There were, then, more goods to ex- 1 
change and more possibility of exchanging them. But a whole 
world of social relations stood in the way. And these established 5 
social relations found at once their supreme expression and their 
trusty support in one massive and puissant institution, the 
Catholic Church. How, for example, could the English peasants 
be dispossessed and the great sheep runs, which were to produce 
the wool for the " staple trade," be enclosed, if an unshaken 
Church held some of the best land itself, and supported actively 
the maintenance of the old feudal relationships on the rest ? 
How could the quick, shrewd and independent spirit of traders 
be acquired if a supreme and authoritative Church, with all 
educational institutions in its hands, taught that happiness in 

1 Or to such things as salt, which while necessaries, are only necessaries in 
small quantities, and which are only found at isolated points on the earth's 
surface, and so must be transported. 



16 THE COMING STRJJGGLE FOR POWER 

this life and salvation in the next, were not determined at all 
by individual actions but by a perfect trust in the opinions and 
instructions of the nearest priest ? 

It is true that the priests of the Catholic Church taught that 
salvation was obtainable by works rather than by faith. But 
44 works " did not in the least signify the estimable conduct of 
the individual, his thrift, his industriousness, and the like. 
Works meant adequate donations to the Church. It is true that 
the theological champions of the new men of the market, the 
ecclesiastics of the Reformed Churches, preached that men 
might be saved by faith alone. But this was essentially an asser- 
tion of religious individualism : a reassurance to the Protestants 
that they could die in the grace of God without having to utilize 
the costly services of Rome. 

For the oldest and greatest monopolist of all, Holy Church 
herself, the monopolist in God, had to be assailed if the new 
middle men, the soldiers of the market, were to grow and pros- 
per. Let no one suppose that such a phrase as " the monopolist 
in God " is some far-fetched flight of fancy. God the blessings, 
the forgiveness, the indulgences of God was in the sixteenth 
century a commodity, or rather a service. And the provision 
of God's mercy was an essential service to the men of that time. 
At that particular stage in the development of the human 
consciousness, and it is a stage which has occurred before in 
history and may occur again, some impressive form of religious 
consolation was urgently necessary to men. Without it they could 
not bear life. And Holy Church had monopolized, had most 
effectively " cornered," God's mercy. The Church had succeeded 
in making men believe that God dealt out His mercy only 
through an accredited priest. And in a transaction of this special 
character, when the want to be satisfied was a purely subjective 
one (though none the less real on that account), if men believed 
that a thing was so then indeed so it was in fact. Accordingly, 
as everyone knows, indulgences, sold at good, stiff, monopoly 
prices, were one of the most important commodities of the epoch. 
Holy Church sold them, but, as usual, had some difficulty in 
collecting her receipts. Accordingly the great contemporary 
European banking house of Fugger was in the habit of dis- 
them at a quite reasonable price. (It may perhaps 



THE STRUGGLE ^DR THE MARKET If 

be some consolation to those great London banking and accept- 
ance houses of to-day, which are desperately trying to collect 
loans Jrom Eastern Europe, to remember that their illustrious 
predecessor, Messrs. Fugger, also burned its fingers very badly 
in Germany, in the matter of defaults on indulgences.) 

If we envisage the condition of human consciousness 500 years 
ago, if we envisage the intimate and essential part which re- 
ligious institutions then played in daily life, we shall have no 
difficulty in understanding the economic necessity of the 
Reformation. It was doubly essential to the new born middle 
class of Europe to break the power of Rome. It was essential 
for the most concrete and worldly reason : for the Roman 
Church held so much of the best land that the establishment of 
private profit-making agriculture, producing goods, such as 
wool, in bulk for exchange on distant markets, was impossible 
until the abbeys and the convents had been dispossessed. And 
it was equally essential from an ideal or spiritual point of view 
in order that the men of the new middle class should have the 
religious assurance that was necessary to them. 

These tasks were accomplished in two different ways in 
different parts of Europe. In England during the first half of 
the sixteenth century the Roman Church was destroyed out- 
right, a new State Church set up, and the Church lands made 
over, by that much underestimated middle-class revolutionary,* 
Thomas Cromwell, to the new private landlords. In the Rhine- 
land, on the other hand, the Catholic Church bent before the 
new forces and was not broken. The power of Rome, but not 
of Catholicism, was destroyed. The Church was decentralized ; 
the local bishops set up as independent sovereigns, who them- 
selves proved hostile to the regular orders and, more or less 
gradually, transferred the land to private ownership. And here, 
;at the outset, we come across the indissoluble connection be- 
tween private property and free exchange. For there could be 
little buying and selling until the custom-restricted, semi- 
communal property of the middle ages had been transformed 
into private, individual, unrestricted property. 

The curious may trace the slow retreat of the Catholic Church 
before the growing power of the men of the market in the 
successive changes in the teaching of the Church on the question 

BP 



18 THE COMING STRUGGLE FOR POWER 

of usury. For if buying and selling, connote private owning, 
owning Jn turn connotes Jending. The growth of trade is im- 
possible unless the capital necessary to its conduct can be hired 
by the traders. But the hiring out of capital for gain was usury : 
and Usury was sin. So said the Church in the heyday of its power. 
But as in fact the technical possibility, and then the actual 
practice, of trade grew greater and greater, and as all efforts 
to suppress it failed, it became necessary for the Church to find 
reasons why usury might sometimes be allowed. First it was 
suggested that, since it was clear that one man might freely 
lend another capital with which to conduct a trading enterprise, 
if at the end of the period of the loan he received back nothing 
more than the original amount, then also the lender might 
accept, without offence, a recompense for any risk of loss that 
might be entailed. This was the doctrine of Damnum emergens. 
But this did not suffice : other loopholes for the charging of 
of interest were needed. So the schoolmen invented the doctrine 
of Litcrum cessens. This meant that the lender might charge 
interest to cover the loss of not employing his capital himself 
in trade. It might be thought that this doctrine would serve to 
absolve most creditors. But the Church was in the end forced 
to go still further. Accordingly the doctrine of Contractile trinus 
was evolved. Contractus trinus was a threefold contract between 
lender and borrower : under its provisions, the borrower first 
entered into simple partnership (which had always been allowed) 
with the lender : the borrower then insured the lender against 
loss of principal and finally he insured him against loss of profit 
on the enterprise. It must have been an exacting capitalist 
indeed who did not find his requirements met by the provisions 
of one or other of these doctrines. 

How necessary was this preliminary religious revolution to 
the growth of vigorous buying and selling may be gauged from 
the fact that in the one country in Europe, in Spain, where the 
Catholic Church was neither bent nor broken, until 1981, 
capitalism has never flourished. For what after all is Protest- 
antism but the free market in God? What are Liberty of 
Conscience, and the principle of Justification by the unaided 
Faith of the individual, but claims that every man may go and 
fetth down God's mercy from on high, if he can, for himself? 



THE STRUGGLE FpR THE MARKET 19 

Protestantism is theological private enterprise. Thus the original 
monopoly, the great double monopoly of the Roman Church 
over the best available land and over men's spirits, was 
broken. 

9 

One hundred and fifty years later in the epoch of the next 
pitched battle for the market, in the England of 1640-1688, the 
terrain of the engagement had shifted (though by no means 
completely) from the religious to the political field of con- 
sciousness. The Crown, instead of the Mitre, had become the 
highest expression and the chief support of monopoly, of power 
without the consent of the now formidable middle class. The 
contest of King against Parliament was a contest between 
men who stood by the older ways of life against the ever- 
growing power of the new middle class. For the parliamentary 
leaders, Pym, Elliot, Hampden and Oliver Cromwell, were, 
of course, an agricultural middle class. These great squires, 
some titled, some commoners, were not feudal overlords but 
busy, bustling, agricultural entrepreneurs. After all their title- 
deeds ran back no farther than Bosworth field. They did 
not dislike being considered to be noblemen : but they were 
far from refusing to be in fact merchants and tradesmen. 
They were the forerunners of the " Whigs," that remark- 
able class of Englishmen who, uniquely, have known how to 
combine most of the privileges, dignities and splendours of 
feudalism with the enterprise, vigour and acquisitiveness of 
commerce. 

The economic motivation of the Rebellion of 1640 and the 
Revolution of 1688 is not far to seek. The wealth of the new 
commercial squires and landowners, of the merchants, of that 
whole new class the very existence of which now depended on 
the maintenance and expansion of the free market, had grown 
quite out of proportion to their political power. They felt threat- 
ened, and were threatened, by the arbitrary and uncontrolled 
power of the King; they were restricted by his monopolies 
and annoyed by his taxation. Their discontent was not due so 
much, however, to anything that the King had done to them 
(1600-1640 were for them exceptionally prosperous years), as 
to the fact that for just so long as he was out of their control 



CO THE COMING STRlfGGLE FOR POWER 

he was dangerous and therefore intolerable. The King was a 
piper whom they paid" and they would not even listen to his 
tune until they had called it. Moreover, although the King had 
in fact done little or nothing to them, it was apparent that he, 
or r&ther that his man Stratford, intended much. For in each of 
the great European states in the seventeenth century someone, 
either king, or nobles, or middle class, had to act. A critical 
point in the development of the market had arisen. The inter- 
change of goods, specialized production, an increasing scale of 
production, and the enormously increased concentration and 
accumulation of wealth which these things connoted, had at 
length made the existing form of State totally inadequate. It 
was imperative that someone should organize the modern State, 
An administrative staff, an effective and professional judiciary 
for the enforcement of contracts, a permanent and professional 
armed force for the promotion of the nation's commercial 
interests without its frontiers, and the suppression of dissatisfied 
classes at home, had become urgently necessary. Thus the burn- 
ing question in every one of the rising European states was the 
question of who should create, and consequently control, this 
new and formidable apparatus of coercion. Different states 
found different answers. In France, Cardinal Richelieu's success 
decided that it should be the royal power which should do the 
job. In Britain, Stratford's failure denoted that it should be 
the upper middle class which should, after fifty years of 
struggle^Jorge and then wield the weapon of the modern State 
machine. 

Thus the struggle in Britain from 1640 to 1688 was a struggle 
to decide which of two opposing interests should take the power 
necessary to create a State apparatus adequate for the new 
possibilities of production and of exchange. It was not in the 
least a question of the revolt of an oppressed class against a 
tyrant. It was a question of two well-matched opponents 
struggling for the glittering prize of being able to create and to 
possess a State machine which should henceforward make them 
almost omnipotent for the furtherance of their own economic 
interests*;- It is this fact which has enabled the orthodox scfibol 
of British historians, who, naturally, express the views of the 
middle class, gincc it was in the end victorious, to pretend 



THE STRUGGLE FPR THE MARKET 21 



that the struggle was not waged for material ends at all. Mr. 
G. M. Trevelyan, to-day the leading British historian of this 
school, tells us that " in England the revolutionary passions 
were stirred by no class in its own material interest. Our patriots 
were prosperous men, enamoured of liberty, or of religion, or 
of loyalty, each for her own sake, not as the handmaid of class 
greed. Hence the moral splendour of our Great Rebellion. . . ." 
(England Under the Stuarts.) Two pages later, however, Mr. 
Trevelyan forgets about the " moral splendour " and tells us 
what the Great Rebellion was about. " Finch," he says, " was 
the judge who at Hampden's ship money trial had first roused 
Englishmen to their senses by proving that their -property was 
not their own but the King's." There is nothing like a threat 
to property for rousing moral splendour in prosperous patriots. 
Hampden, one of the richest men in England, would not pay 
his taxes because he and his class had determined that Britain 
should not be organized into a modern State until and unless 
they were able to do the organizing. For the British middle 
class felt itself equal to the task. It was just because they were 
growing richer and stronger, and yet were given no increased 
share of power, that the English middle classes rebelled. For 
although it is demonstrably true that men do not invariably 
act according to their individual and immediate economic 
interests ; that classes do not rebel only because they are starving 
(and that no one ever suggested that they did), yet it is such 
growing disproportions as these between the real strength of 
a class and the amount of political power which is allotted to 
it, which cause those redistributions of power between sections 
of the community which are called, if they are rapid, revolutions, 
if gradual, reforms. And it is a change in economic conditions, 
a change in the methods of production, that is, which first 
shifts the balance of strength in the community, and so starts 
the whole movement. 

It was precisely the growing wealth and power of the English 
squires, the agricultural entrepreneurs of the period, and of 
the merchants, that enabled them to break the power of the 
monarchy. It is perhaps an example of that political capacity 
which English historians are ever ready to attribute to the 
English people, that the Whigs as this great coalition frf the 



22 THE COMING STRUGGLE FOR POWER 

champions of the market came to be called grew to realize 
that it was not monarchy itself which had to be destroyed. A 
king was a perfectly harmless kind of a person, so long as he was 
their king. What was obnoxious, what was intolerable, was the 
principle of absolute monarchy, the claim that the king ruled 
by divine right, in other words by his own right ; and what was 
equally obnoxious was the principle of popular monarchy, the 
claim that the king was the guardian and the father of all his 
subjects, and not merely of his property-owning subjects. 
Such claims would certainly never do. But there was no reason 
on that account to fly to Cromwellian extremes of republicanism. 
Moreover, long before the end of the seventeenth century it had 
become apparent that the English middle class was itself sub- 
divided. The Whig nobles, the great merchants, Mr. Trevelyan's 
" prosperous patriots," had little sympathy with the small 
shopkeepers and yeomen, who had finally won the civil war. 
The new Model army was the party in the most modern sense 
of the term of the lower middle class, and the Commonwealth 
was their brief period of power. So little, however, had the Whig 
grandees in common with them that they preferred even a 
Stuart restoration. Accordingly, when in 1688 the Stuart be- 
came odious to them, they had no intention, and no need, to 
make another new model and another Commonwealth. The 
glorious revolution was anything but glorious, for the lower 
middle class. Their interests and ideas were totally ignored in 
the resulting " settlement," and they remained all through the 
eighteenth century a dissenting and sometimes rebellious faction. 
The " prosperous patriots " actually preferred a monarchy, so 
long as they controDed it, to a republic. They disliked the prin- 
ciple of absolutism, not the institution of monarchy. These 
subtleties had been arrived at by the English Whigs of the second 
half of the seventeenth century, not so much by ratiocination 
as by nearly half a century of trial and error. They applied them 
in practice in 1688 and the result was that England got a start 
of just a century over the rest of Europe as a commercial nation. 
She had taken the lead in the race for the establishment of 
political institutions calculated to foster and promote the growth 
of the free market. For what after all is the substitution of a 
king by Act of Parliament for a king by divine right, but the 



THE STRUGGLE FOR THE MARKET 28 

application of the principle of the free market to monarchy ? l 

The French revolution and its consequential wars (the period 
from 1789 to 1815) saw the last and greatest of the pitched 
battles in the war for the free market on the European continent. ~ 
Once again, as in England a hundred and fifty years before, 
it was the increasing wealth and strength of the members of 
the French middle class which enabled them, which in fact 
forced them, in defence of their wealth, to take power. By this 
time the issues had become clearer. The terrain of the struggle 
it is true was still predominantly political. But a consciousness 
of the economic foundation was growing. Did not Danton as his 
first act of power propose " that all ownership, whether terri- 
torial, individual, or industrial shall be maintained for ever " ? 
How can the market be free, how can men buy and sell, unless 
free purchase and sale, and not Governmental or noble distraint, 
is the only method by which goods pass from hand to hand? 
Danton, that great bourgeois, put his finger on the very crux 
of the matter on the relationship of property and the market. 

Up till the end of the eighteenth century, the sanctity of 
private property had seemed the best guarantee of the liberty 
of .the market. It was above all necessary, Locke, the great 
Whig theorist, had explained, that men should enjoy the fruits 
of their own labour : that they should reap where they had 
sown. Their property was to be the result of their labour ; neither 
more nor less. Labour and property were to be identified. 8 
Assuredly, however, men cannot live like so many Robinson 
Crusoes solely on the fruits of their own toil. Specialization, the 
division of labour, can multiply a hundredfold the general 
wealth. How therefore is the division of labour to be reconciled 

1 The Dutch middle class got into power even before the English. But from 
sheer lack of territory and population, Holland could not become a modern great 
power. After an obstinate struggle designed to prevent the growth of the com- 
merce of England, the Dutch burghers had perforce to make common cause with 
their rivals against the menace of a still absolutist France. And in such an 
alliance they inevitably took second place. Thus the exception of Holland does 
not in fact affect the truth of the statement that the English middle class, by the 
settlement of 1688 in which they actually borrowed a Dutch king got a clear 
lead of the middle classes of all other nations capable of becoming great powers. 

* See, for example, Locke's Treatise on Civil Government, chapter v., where 
property is justified by explaining that it arises from men converting natural 
objects to their own use through their labour. 



M THE COMING STRUGGLE FOR POWER 

with the great necessity of the sanctity of property, with the 
assurance that every man shall enjoy the full fruits of his own 
labour ? Fortunately, the new theorists believed, that greatest 
of all blessings, the free market solved the problem. By fair 
exchange, by sale and purchase, a^ man might enjoy if not the 
actual physical fruits of his own labour, yet the full value of 
that labour ; if not the actual corn he had sown, yet clothing, 
shelter and all the other necessaries of life to the full value of 
his corn, which he had freely sold upon the market. 1 

These theorists hardly paused to enquire, however, whether 
property might be of two different kinds. They did not ask 
whether the private possession of the objects without which 
those things which satisfy the wants of man cannot be produced, 
whether in a word, private property in the means of production, 
would have the same happy results as did private property in 
the fruits of laboyr. They did not differentiate clearly, for 
example, between private property in land and private property 
in corn. Nor was their failure to do so accidental. For the new 
theorists were the theorists of the men whose private property 
the land had in fact become. For them it was enough that the 
freedom of the market seemed to guarantee the sanctity of 
private property, by reconciling it with the necessary division 
of labour. So Locke and Smith thought, and Danton acted. 
And the thoughts and the deeds of the great middle class for 
which they stood conquered the whole earth. 

The men of 1789 killed feudalism in France. The Frenchmen 
of the first decade of the nineteenth century broke the back of 
feudalism in Europe. Napoleon led the great crusade of the free 
market. He incarnated the fully evolved European bourgeois. 
We only fail to appreciate this fact if we let the garish splendour 
of the Emperor obscure the workaday genius of the First Consul. 
It was the Napoleon of the Code, however, who accomplished 
the mission which history had allotted to him ; this was the 

1 Thus Adam Smith, in The WeaUh of Nations, Book I., chapter iv., tells us 
that a man " supplies the far greater part of his wants by exchanging that surplus 
part of the produce of his own labour, which is over and above his own consump- 
tion, for such parts of the produce of other men's labour as he has occasion for." 
And again, The Wealth of Nations, Book I., chapter v. f " The value of any com* 
modity to the person who possesses it, and who means not to use or consume it 
himself, but to exchange it for other commodities, is equal to the quantity of 
labour which it enables him to purchase or command." 



THE STRUGGLE FOR FHIC MARKET 25 

Napoleon who began his first proclamation with the words : 
" The Revolution has returned to the principles with which it 
began : it is at an end." Danton must have applauded from the 
tomb, for the original principles of the Revolution had been noth- 
ing else but the realization of the battle-cry of the middle class 
that the rights of private property are eternal and inviolable. 
It was because wherever he went he carried this slogan with 
him, and for this reason alone, that Napoleon was able to play 
football with the crowns of Europe. Into every country his 
armies brought the free market. 1 

It is at first glance, perhaps, surprising that in the eighteen 
hundreds Napoleon, the crusader of the free market, should have 
found his supreme antagonist in the British, who a hundred 
years before were the market's best champions. In fact, however, 
the interactions of the English and French middle classes be- 
tween 1640 and 1840 give an instructive picture of the way in 
which the historical process works. First, as we have seen, 
England took the lead : the whole system of social relations, 
the political institutions and consequently the prevailing ideas, 
in the England of the seventeenth and eighteenth centuries were 
far freer, were far better suited, that is to say, to buying and 
selling, to the growing predominance of commerce as the na- 
tional way of life, than were the institutions of France. How 
could it be otherwise, when the English aristocracy had gone 
into trade and the English merchants had been ennobled ? Yet 
that unique coalition of forces, a commercially minded aris- 
tocracy and an aristocratic mercantile class, that great " Whig 
interest," which dominated England for over two hundred 
years, which gave her an enormous lead in the acquisition of 
wealth ; which, in a word, founded the British Empire, had its 
limitations. The Whigs were too bound up with an older world 
to kill outright either the monarchy, or the remnants of feud- 
alism. For, as we have seen, it was the upper middle class 
which had made the British revolution. Naturally, therefore, 
the Whigs were ever menaced on the left by the lower middle 
class which had largely fought their battle for them in the civil 

1 Stendhal's Rouge ct Naif makes us realize what that meant to the young 
men of the new middle classes of Europe, still half stifled by feudal absolutism*. 



26 THE COMING STRUGGLE FOR POWER 

war, and had been bilked in 1688. The existence of the dissenters 
and the Wilkesites was a reminder that liberty should never be 
allowed to get out of hand. Thus the English Whigs were 
convinced that things must not be pushed to extremes. Justice 
demanded, they agreed, and the institution of private property 
ensured, that every man should enjoy the fruits of his own 
labour. There was, however, the question of inherited landed 
property. There were, for example, the innumerable acres of the 
Duke of Bedford, himself the father of all Whigs. It might be 
difficult to show that the Duke's gargantuan rent-roll was 
indeed the exclusive product of the labours of the House of 
Russell. Decidedly things must not be pushed to extremes. 
In other words, the liberty which had been established in 
eigtheenth-century England was a liberty for the big merchants, 
the great landowners and the trading aristocrats. They and they 
alone possessed the freedom of the market. 

The Frenchmen of 1789 had other ideas. The surviving ab- 
solutism of the French monarchy had prevented the emergence 
of a class of really big bourgeois and had at the same time kept 
the aristocracy out of trade. And so the French champions of 
the free market, when they finally took power, seemed entirely 
strange, and not a little terrifying, to most of their well-estab- 
lished English counterparts. For these Frenchmen, being in the 
towns for the most part petit bourgeois, and in the country 
small proprietors, had no use for monarchy or feudalism at all. 
And off went the heads of both king and nobles, a proceeding 
most shocking to Mr. Burke, who had succeeded Mr. Locke as 
the chief British theorist of Liberty. The result was, however, 
that in fifteen years the French bourgeoisie had more than 
caught up with the English middle class ; had established a 
degree of freedom of exchange unknown before ; had elaborated 
in the Code Napoleon a system of social relations scientifically 
adjusted to a modern middle-class state ; had, in a word, finally 
done away with feudalism. The aristocratic, commercial, constitu- 
tionally monarched England of 1688-1789 had been a menace 
to its contemporary absolutist, semi-feudal France. They had 
struggled all through the eighteenth century for the vast heri- 
tage of Spain. For Spain had proved incapable of emerging 
even to the French degree from the fetters of feudalism. Britain 



THE STRUGGLE FOR THE MARKET 27 

had been on the whole successful just because she was less 
feudal than her rival. But now, in the period 1789-1815, the 
roles were suddenly reversed. France, equalitarian, petit bour- 
geois, republican, or commercially imperial France, revealed 
by contrast a relatively feudal Britain : menaced her power 
and wealth and was soon locked with her in desperate 
struggle. 

The British coalition of ennobled agricultural entrepreneurs 
and merchant princes, the great Whig interest, was, however, 
a formidable opponent. It could even afford in its struggle 
with the revolution to allow its small Left wing (the famous 
" hackney-carriage full ") to split off under Fox and show 
sympathy with the revolutionaries. Meanwhile the main body, 
with Burke, coalesced with the Tories, who by then had lost 
most of their old-world anti-commercial notions. 1 

After a struggle that strained but did not in itself break the 
old governing class, the revolution was apparently beaten and 
Napoleon destroyed. Britain produced in Arthur Wellesley, 
Duke of Wellington, the very incarnation of her " system." 
He summed up the British eighteenth century, just because he 
was not by any means an exclusively feudal personage. On the 
contrary, there was nothing anti-commercial about him. He 
and his brother, Lord Wellesley, had been servants of the East 
India Company before they were servants of the State. For 
Britain's ultimate victory was due to her wealth. And this 
wealth was the result of a century of relatively free market 
conditions. 

It is possible to observe how in fact British economic pre- 
dominance exerted its decisive influence. The Napoleonic 
system first began to weaken because the French armies which 
had burst out over Europe had gradually, during the Empire, 
ceased to be the deliverers of the middle classes of Germany, 
Italy and Austria ; or, at any rate, they had become extremely 
expensive deliverers. Napoleon had to make the delivered 
nations pay every penny of the cost of their liberation. For the 
resources of France could not possibly have stood the strain. 
Hence the rise of nationalism which after 1810 began to give 

William Pitt had been an apt pupil of the Edinburgh eoonomitti. 



28 THE COMING STRUGGLE FOR POWXfc 

the Emperor such trouble. Moreover, the French armies had 
now penetrated to the two countries of Europe, to Spain and 
to Russia, where there existed only the feeblest beginnings of a 
middle class. Hence, Napoleon found neither ill Moscow nor 
Madrid that solid basis of support which he had used successfully 
in every other capital of Europe. Britain saw her opportunity 
and sent an army to redeliver Spain from her former liberated 
Wellington's army, however, would have been no more popular 
in the Peninsula than were the French, if it had not been for 
the cardinal fact that while the French lived on the country, 
Wellington's men paid for everything. And Britain's economy 
was sufficiently strong, owing to its imperial profits, not only 
to keep an army for five years in Spain, but to pay enormous 
subsidies to her European allies. She thus enabled the semi- 
%idal monarchies of Europe, whose own resources were ex- 
hausted, to do most of her fighting for her. (Britain's wealth 
has always enabled her to do a good deal of her fighting by 
proxy. Subsidies and mercenaries founded the British Empire.) 
Thus one may say that it was Arthur Wellesley of the East 
India Company a ** nabob " amongst generals whose Indian 
victories were bringing home enormous profits, who beat the 
French, rather than that august personage His Grace the Duke 
of Wellington. At Salamanca, Vittoria and Waterloo, the Duke 
capitalized the gains of Seringapatam and Assay. 

Waterloo, however, from the point of view of Wellington 
and his peers, was an empty victory. All through the eighteenth 
century Whig freedom was doing something more for Britain 
than foster the large-scale agriculture and the half-plundering 
commerce of the aristocratic merchants. The relatively free 
market conditions of distribution permitted a growing concen- 
tration of the various handicrafts by which the needs of the 
population for industrial products were met. And, with that 
concentration, the change in the actual methods of production 
which had been slowly going on since the middle ages, suddenly 
gathered an altogether new speed and momentum. Productive 
technique human command over nature was able to make 
certain critical strides forward and modern mechanized pro- 
duction came to birth in Coalbrookdale in Shropshire, beside 
the Clyde, at Hockley Brook in Birmingham and in the valleys 



STRUGGLE FOR THUS MARKET 29 

of Lancashire. So decisive a change in the economic foundations 
of a society cannot take place without necessitating a political 
reorganization. Moreover, the persons who benefited by the 
former political system will always be sure to dislike the change. 
There will, therefore, be a conflict of interest between them and 
those persons whose interests are bound up with the establish- 
ment of the new methods of production. In this instance the rise 
of mechanized British industry produced a working class : more 
immediately important in its political consequences, it pro- 
duced a new middle class, unrelated to the old coalition of 
ruling classes. 

This new industrial, as opposed to commercial, middle class 
found itself excluded from the rights and privileges of the 
State. Together with the new industrial working class, which 
on the whole followed their leadership, the new excluded lords 
of cotton and of iron set about the task of acquiring a political 
position adequate to their new economic status. They found 
important allies in that Left wing of the old Whig interest which, 
at the time of the French Revolution, had broken away from 
the main body of the governing class. And, in 1832, Grey and 
Russell passed the Reform Bill and admitted them to power. 
With perfect appropriateness it was over Wellington, himself, 
as the last Prime Minister of the forces of the older order, that 
they triumphed. From a social standpoint, the Reform Bill 
avenged Waterloo. Just as the failure of the Restoration, and 
the success of the Revolution of 1830, showed that a semi- 
feudal absolutism could not be restored in France, so the Reform 
Bill proved that the epoch of the great British alliance between 
the aristocratic agricultural entrepreneurs and the merchant 
adventurers was over, and that a new epoch of the dominance 
of the industrial middle class had begun. The battle for the 
free market had been won. 

It has been well said that all distinctions in nature and society 
are unstable and to a certain extent arbitrary. Just as in the 
heyday of feudalism there was a good deal of buying and selling, 
so at the height of the era of the free market, there were many 
fixed human relationships : moreover (and this will form a major 
theme of these pages), long before the last feudal stronghold 



80 THE COMING STRUGGLE FOR POWER 

was destroyed the first of the new enemies of the market the 
new monopolists had arisen. For no type of social order has 
as yet completely monopolized human relationships. 

This undoubted fact has led some historians to deny the exist- 
ence of all these historical categories feudalism, capitalism, 
the free market, the middle class, the aristocracy, the workers 
of which we have been speaking. There are really no such things, 
we are now told. There is just " history," a vast undifferentiated, 
homogeneous mass of facts which cannot possibly be analysed 
or classified in any way. Thus it is impossible to come to any 
conclusion on any subject at all. Our reply must be that, in 
spite of the undeniable fact that historical categories are never 
absolute, it should be possible for even an historian to detect 
a difference between the England of 1840 and the Rome of 
1600, between the outlook upon the world of Saint Thomas 
Aquinas and that of Mr. Jeremy Bentham. It is quite true that 
the world of 1840 still contained conditions which would have 
been familiar to Saint Thomas, and that the world of 1800 
nurtured shoots that Mr. Bentham would have regarded as 
hopeful. Is it necessary, however, to deduce on that account 
that there was no such thing as feudalism and that there is 
no such thing as capitalism ? 

A more serious question remains. Can we accept the general 
view of the course of history which is adopted in these pages ; 
can we accept the hypothesis of this chapter as to how and why 
feudalism turned into capitalism, into something, that is, very 
much like its own opposite ? The first answer to that question 
is that the discovery of historical truth is a more complicated 
matter than had been supposed. " This then is my truth,'* 
remarked Zarathustra. " Now, tell me yours." Historical truth 
for, say, the working class of Great Britain, may be something 
rather different from historical truth for the professional his- 
torians. We have been taught by the physicists that the position 
of the observer is an integral factor in the characteristics of the 
thing observed. The perspective of history is long. But the angle 
of vision is very important. This, however, can be said confi- 
dently. The view of history here adopted is a hypothesis which 
gives sense and coherence to the human past. If we reject it, 
we must retire with the agnostic historians to bury our 



THE STRUGGLE FOR THE MARKET 81 

heads in enormous heaps of meticulously collected and quite 
unrelated facts ; or, as they themselves are beginning to 
recommend, give up as vain the whole quest for the truth 
and return with the aesthetic biographers to the art of story- 
telling. 



CHAPTER II 
Capitalism and the Market 

BY the middle of the nineteenth century the battle for the 
market had been won. Sale on the market had become the 
predominant and characteristic object for which goods and 
services were produced. The middle class of Europe in the four 
preceding centuries of sanguinary struggle had done its work. 
In order to make room for the market, in order to render every- 
thing in life susceptible to sale and purchase, nearly every Con- 
vention, every social relationship, every element of conscious 
co-operation, or of permanent, legal dependence, had been 
shattered. All men, they were now assured, were at last " free 
and equal " : they were to approximate as nearly as possible to 
perfect social atoms, without ties or impedimenta, whether 
human or divine, bent only on one activity, namely, to produce 
in order to buy and to sell. Everything else, it was assumed with 
unparalleled confidence, would very shortly be added unto 
them. 

Such was, of course, the theory rather than the practice of 
the victorious middle class. Actually, the freedom of the market 
was by no means universal. Feudal survivals existed everywhere 
(except perhaps in the United States after the victory of the 
industrial middle class in the civil war). In Eastern Europe, 
the market was never freed from feudal lumber ; in France, 
however, the job was done with logical thoroughness ; and in 
Britain, in spite of the survival of many feudal forms, a legal 
and social system was established by the new industrialists which 
was designed to afford the very maximum freedom of exchange. 
The great British extremists of the theory of the free market, 
Bentham, McCullough, Senior and their followers appeared. And 
in Cobden the market found its Saint Paul, for he preached also 
unto the Gentiles. At length, the last logical step was taken and 
the principle of the free market was extended beyond the bounds 
of the community. Its claim was transformed from being a claim 
of perfect freedom of contract and exchange between individuals 
within the state, into a claim for freedom of contract and ex- 
change between states, and between individuals in different 



CAPITALISM AND THE MARKET 88 

states. The theory of the free market became the theory of the 
free world market ; became the theory of free trade. 

It was perhaps natural for the European middle class to 
dance a dance of triumph. The war whoops and the hosannas 
of their spokesmen, however, do not make very pleasant reading 
to-day. (It is difficult for us to comprehend, and it is painful 
for us to remember, that Lord Macaulay, for example, was 
reduced to a state of lyrical optimism by the contemplation 
of the growth of the town of Torquay.) It is their horribly shal- 
low optimism which now renders somewhat disgusting the 
writings of the great middle class economists and historians 
of a hundred years ago. They were too ready, indeed they were 
determined, to mistake the unparalleled good fortune of them- 
selves and of their class for a proximate millennium for all 
mankind. (One could hear just the same opinions in our own 
time, and more naively expressed, in the America of 1921 to 
1929.) 

In Great Britain about the year 1860, the principle of free 
exchange must have seemed to a man of property to have 
something infallible about it. A detached observer, it is true, 
might have had some difficulty in recognizing in the existing 
state of affairs the ideal community of freemen to which the 
seventeenth and eighteenth century prophets of Liberty had 
looked forward. Every man, it must be remembered, was to 
have been perfectly free of, and legally equal to, every other. 
Naturally, however, they might make willing contracts between 
themselves by which they should exchange their goods and 
services. Thus, they were to enjoy the advantages both of an 
almost complete social independence and of close economic 
co-operation. The Lancashire of the eighteen-sixties did not 
perhaps correspond in all respects to this ideal. Perfect equality 
before the law did not always seem very efficacious in prevent- 
ing death from starvation and overwork in the case of British 
freemen who chanced to be cotton operatives, while it might 
have been observed that the British freemen who chanced to 
be mill owners were- entirely immune from these accidents. 
And the operatives, benighted creatures, prized their undoubted 
freedom of contract so lightly that they were always badgering 
Parliament to restrict their liberties to take away, for example, 

C* 



84 THE COMING STRUGGLE FOR POWER 

their undoubted constitutional right to work for fourteen hours 
a day. This was peculiar. But it was incidental. And British 
property-owners, keeping their eyes firmly fixed upon themselves, 
were entirely convinced that very little now remained to be 
done except to convert the whole of the rest of mankind to their 
point of view. 

Human life, however, turned out to be a more complicated 
matter than the English burghers of the nineteenth century 
supposed. Hitherto, we have emphasized the destructive 
struggle of the middle class against feudalism. That struggle, 
we have said, was fought in order to establish the principle of 
free exchange : to dissolve every tie, except that of free contract, 
between human beings. Is it possible, however, for men to live 
in a kind of social vacuum, without any social system at all, 
regulating their affairs wholely by means of private contracts 
between themselves ? Such was the implication of the theorists 
of the middle class. Admittedly, some authority was needed 
for the enforcement of these private contracts. And is not this 
authority the nucleus of a new social system which the middle 
class must set up for itself after it has destroyed feudalism? 
' As we all know, the middle class has created an elaborate social 
5 system which is universally known as capitalism. In this chapter, 
it will be our task to examine the birth process of this new 
social system ; to show how the establishment of the free market 
led on to the development of modern capitalism. 

The first question which we must ask is, how was it that a 
social system founded upon the principle of free exchange, 
which was established by the breaking down of almost all social 
ties, was yet able to provide for that high degree of human 
co-operation which modern methods of production obviously 
require ? For observe how large an amount of human co-opera- 
. tion is needed in an industrial society. "We may best appreciate 
this point by comparing an industrial to a peasant society. 
Now an industrial society differs from a peasant society in two 
ways. In the first place, in a peasant society nearly everybody 
works at the production of the same things. Each peasant 
produces his own food, and, in the older peasant societies, most 
of his clothes and household necessities. Society consists of 
numerous and almost identical units all engaged on the same 



CAPITALISM AND THE MARKET 85 

tasks. 1 Contact between such units need be comparatively 
slight. Let us now contrast this state of things with the picture 
presented by an industrial society. In an industrial society the 
very first thing we notice is that each unit is producing different 
things. One factory is making boots, another paper, another 
motor-cars, another steel, another tin cans, another railway 
engines, another ships, and so on in great variety. Economists 
call this system the division of labour. It is obvious that such a : 
society cannot exist for a day without continual contact between 
all these producers. Men cannot live by tin cans alone. As every- 
body knows, an industrial society in fact lives by perpetual 
contact and co-operation between these different producers. 
Now, and this is the point, the extant social system must some- 
how provide for this high degree of social co-operation. The 
producers of corn, boots, houses, paper/ ink, steel, ships, printing 
machines and so on and so on must somehow be got together. 
For if these producers do not somehow or other co-operate, there 
is no way of ensuring that the right proportions of each of these 
things are produced, or indeed of ensuring that some of them 
are produced at all. Society might' suddenly, for example, 
find itself with far too much paper and no ink at all. 

But there is another and equally important way in which 
an industrial society differs from a peasant society. Not only 
does each peasant produce the same things as the other peasants, 
but also he produces them by himself. On the other handset 
only does each producer in an industrial society produce different 
things, but also he produces his particular product, not alone, J 
but by association in work with hundreds or thousands of other 
men. In an industrial society, then, each producer is no longer 
a single human being, or a single human family, as in a peasant 
society. The productive unit is a factory JL the producer, that 
is, is an association of hundreds or thousands, or to-day, of tens 
"of thousands, of different human beings. The Ford worker, for 
example, .performs one tiny operation, such as checking the 
clearance of a valve tappet, as the half-finished product flows 
past him on the conveyor belt. Yet tens of thousands of Ford 
workers in the Detroit plant between them make one thing 

1 These units may sometimes be households, sometimes villages within which 
there exists a conventional and hereditary division of labour. 



86 THE COMING STRUGGLE FOR POWER 

y 

only, an automobile* And collectively they make one every few 
seconds. Compare this to the work of an individual peasant, 
who successively and without any outside co-operation, ploughs, 
sows, and reaps his harvest. 

Here then is another job, and a heavy one, for the social 
system of an industrial society. Not only must such a social 
system somehow provide for social co-operation between different 
producers, it must also provide for the actual day to day, and 
minute to minute co-operation necessitated by the working 
together of thousands of human beings zei*AtHu.each producing 
unit. Obviously, the social system of an industrial society is 
going to have to be a far more complicated and effective thing 
than the social system which may have been all that was wanted 
for a peasant society. 

Now, as we all know, that social system which we call feud- 
alism was the prevailing system of the peasant societies of the 
middle ages. Under the feudal system, the degree of social 
co-operation necessary for the peasant society of the middle 
ages was provided for in a quite obvious and rough and ready 
manner. The peasants were grouped into manors (in England) 
and were made to provide by extra work for a lord, to protect 
them, and for a priest to minister to them. A little less obviously, 
but still quite simply and understandably, they had to provide 
by a tax, often levied in kind, for a king and his court, and for 
a few judges ; for, in fact, the very simple kind of social appara- 
tus appropriate for the small degree of social co-operation 
necessary to peasants. 

Capitalism, on the other hand, is the social system set up by 
the middle class and it is indissolubly associated with indus- 
trialism. It has had to face the two jobs which we have just 
defined. It has had to secure a hitherto unparalleled degree of 
social co-operation between the different productive units, and 
at the same time has had, somehow, to make it possible to 
mobilize thousands of separate human individuals for common 
work in factories, to associate them together in order to create 
our huge modern units of production. 

How has capitalism accomplished these two tasks ? Once we 
have grasped the nature of the question, the answer, whether 
we agree with it or not, is quite easy to understand. The 



CAPITALISM AND THE MARKET 87 

y 

confusion arises only if we do not know what question is being 
asked and answered. The importance of asking the question of 
how it is that capitalism achieves this double feat of social co- 
operation, is emphasized when we recall again that capitalism 
was established by the same process which dissolved all previous 
forms of social co-operation. All these fixed legal bonds which 
bound peasant to landlord, landlord to overlord, overlord to 
king, king to pope and so on were smashed by the triumph of 
the principle of free exchange. All the more, therefore, capitalism 
had to find new and effective methods, not only to replace, 
but immensely to improve upon, the old methods of social 
co-operation which it destroyed. We are confronted by the 
paradox that while the principle of free exchange destroyed 
almost all the extant social mechanism, it is associated with a 
technique of production which obviously requires a far more 
complex social mechanism ; which imposes upon society the 
"two new tasks of organization which we have just defined. 
How then does capitalism accomplish these two tasks ? Let us 
first consider the question of how it provides for the co-operation 
of the different independent producers, each producing different 
things. For this, we shall see, is the easier task. 

Under a capitalist system, this form of co-operation is provided 
for, as everybody knows, by the mechanism of price. It is certain, 
it is claimed for capitalism, that just the right proportions of 
the different things society needs will be produced ; that there 
will be just enough paper to go round and just enough ink to 
cover it. For if too much paper is produced, the price will go 
down, and the paper-makers will be discouraged, and vice 
versa. In a word, the law of supply and demand will operate and 
all will be well. The method is too well known to need further 
words. 

It must be observed, however, that the capitalist system 
achieves this automatic and unconscious form of social, co- 
operation between the producers of different things only by 
turning everything that is produced into what is called " a 
commodity " : that is to say into something produced not for 
itrowh"sake, not to use, not for its " use-value," but for exchange 
on the market. For capitalist producers are entirely, indeed 
ostentatiously, independent of each other. They never come into 



88 THE COMING STRUGGLE FOR POWER 

contact at all : they disdain, they abhor, all thought of conscious 
co-operation. What do come into contact, however, are their 
products, the commodities which come pouring on to the market. 
Cotton goods are exchanged for coal, coal for corn, corn for 
timber, timber for railway engines and so on in an endless 
, series. Thus there is no contact at all between the producers 
the human beings engaged in economic activity : the only 
contact is between the products, the things, the commodities, 
which have resulted from that activity. Thus the cardinal fact 
that the work of society as a whole in satisfying its wants under, any 
system^ of the division of labour must necessarily be a work of 
social co-operation is masked and hidden. The fact that the 
producers are in intimate relation to each other is invisible : 
all that can be seen is the relationship of their respective pro- 
ducts on the market. What is actually a relationship between 
people appears only as a relationship between things. Thus men 
in a capitalist society are enabled, by this peculiar masking and 
mystifying characteristic of the market, to think and feel as 
individualistically as if they were so many self-supporting 
peasant proprietors. Yet their economic activities have been 
woven together by a net of the closest mesh : they are actually, 
and without knowing it, engaged in a gigantic enterprise of 
co-operative social production. Thus the market produces at 
once an ever-growing, objective interdependence of the pro- 
ducers, while leaving completely unmodified, and indeed 
intensifying, their subjective, or imagined,- independence. In 
such conditions, there is all the difference in the world between 
men's idea of the social system under which they live and what 
that system is really like. 

It is in this way that capitalism achieves the necessary co- 
operation between the producers of different commodities. It 
is in this way that it accomplishes the first task. 

We now come to the second task which, we saw, must be 
accomplished by any social system which is compatible with 
industrial production. And this task will prove more difficult 
to accomplish. It is necessary, we saw, for a social system suit- 
able to an industrial community to achieve the daily and hourly 
co-operation of thousands of individual workers for the pro- 
duction, under modern conditions, of each separate commodity. 



CAPITALISM AND THE MARKET 89 

How is this to be done? Capitalism, be it remembered, was 
established under the banner of the freedom of the individual* 
The degree of co-operative production which was achieved by 
the legal dependence of the serf on his lord, and the degree of 
more or less voluntary productive co-operation achieved by 
the mediaeval guilds, were alike swept out of existence. How then 
in spite of this, did capitalism achieve a far higher and more ex- 
tensive degree of productive co-operation than had been ever 
before accomplished ? It did so by the establishment of what is 
known as the " labour market." Now the labour market is 
merely a subdivision, a very important " special case," of the 
market as a whole. Let us define as exactly as possible what is 
meant by the " labour market." 

When we say that a labour market has been established, we 
mean that the power and ability of individuals to labour is 
being bought and sold. We saw that once the principle of free 
exchange has been established, every useful article is turned 
into a commodity, into, that is to say, something which is 
produced with the object of exchanging it for something else. 
When once a labour market has been established, the ability 
of men to work is also turned into a commodity. For it is the 
distinguishing characteristic of a labour market that in it people's 
power to work is bought and sold (that is exchanged) by the 
hour, day or week. When once this condition of things has come 
into being, a solution for the problem of mobilizing thousands 
of individuals for a common task in a factory or mine has been 
found. For so many hours of the labour of these individuals 
can simply be bought, and applied to the common task. We 
may, say, therefore, that capitalism solves the problem^ of getting 
large numbers of legally free citizens to work together .in -fac- 
tories by turning their ability to work into a commodity. 

The next question is, obviously, how does capitalism manage 
to get people to sell their power to work in this w&y ? How can 
this indispensable institution, a labour market, be brought into 
being ? In order that a labour market may arise, it is necessary 
that there should appear in the community a category of per- 
sons who will, and who habitually do, hire themselves- out to 
work in return for wages. It is significant of the degree to which 
the characteristics of capitalism are taken for granted that 



40 THE COMING STRUGGLE FOR POWER 

to-day most of us simply assume the existence of such persons. 
The very idea that it might be impossible to establish industry 
or commerce, not because of any technical reasons, but because 
no workers would respond to the offer of wages does not occur 
to people. Yet such was once the prevailing condition of affairs, 
and is still to a large extent the condition of affairs in many 
u primitive " and undeveloped parts of the world. In such places, 
^to liSe the terminology we have adopted, no solution has been 
found for the second of the two tasks which, we saw, face a 
social system suitable to an industrial society. No method has 
been evolved for getting individuals together to work at a com- 
mon task. l 

Now two essential conditions have to be secured before any 
such class of people, both able and ready to sell their power to 
labour, can exist. In the first place, all forms of slavery, serfdom, 
peonage and villainage must be abolished. For if the mass of 
the population belongs to certain overlords and landlords as 
their exclusive private property, it is no use for the enterprising 
entrepreneur to offer them wages in order to induce them to come 
and work for him. In this case the potential worker will be 
unable to sell his labour. Such conditions of legal dependence 
must therefore be broken down. This part of the job, as we have 
seen, the middle class effectively accomplished in its war for 
the market. But there may be another reason why an entre- 
preneur cannot get labourers to work for him. The potential 
worker may be perfectly free, but he may be working already. 
He may be working for himself. He may, for example, be a 
peasant proprietor tilling his freehold plot of land : or he may 
be a skilled artisan a cobbler or handloom weaver with his 
own tools and with ready access to the raw materials he needs. 
In other words, he may himself possess the means of production. 
And if so, why should he come and work for another ? He will 

1 This problem arises acutely to-day in the colonies. All sorts of devices are 
resorted to in order to induce the native peasants, who own their own simple 
means of production, to come and work for wages on the white man's plantations. 
The most common is the well-known imposition of a " hut tax. 9 * A tax of a given 
amount is placed on a native's hut in order to make it necessary for him to earn 
money. He is then enabled to earn the sum of money which he must subsequently 
hand over to the tax-collector by working on the plantation of a white land- 
owner. It is one of the triumphs of the League of Nations that its jurists have 
been able to detect a difference between this procedure and the imposition of 
forced labour. 



CAPITALISM AND THE MARKET 41 

obviously work for nobody but himself, and will enjoy either 
by consuming them directly himself, or by exchanging them 
for something else which he prefers everything that he pro- 
duces. For, after all, if he works for a master that master cannot 
possibly offer to give back to him in wages the equivalent of 
everything which he produces. He cannot be given back either 
all the actual things he makes, or all of what they are worth 
in alternative goods, or in money. For, if his employer did so, 
the worker would in reality still be working for himself. His 
connection with the employer would be merely nominal. The 
only reality would be that the employer had freely and per- 
manently " lent " the means of production to the worker. 
And, as every lawyer knows, an unconditional loan for an 
indefinite period is tantamount to a gift. In this case, therefore, 
the worker will be able, but unwilling, to sell his labour. 

How does the capitalist system solve this difficulty ? What is 
the inducement which makes millions of men work for others 
in return for wages : for payments, that is, which cannot be 
equal to the full value of the things which they produce ? It is 
a sufficient inducement. It is, in the first place, that for the 
most part they neither possess nor have access to the means of 
production. They are not peasant proprietors owning plots of 
land : they are not skilled artisans owning their own tools and 
with ready access to a supply of raw materials. They are workers 
" owning " nothing but their own capacity to work : and, more- 
over, unable to work until they arc given access to the tools and 
raw materials which can alone make work possible. And it is 
not until such a state of things has come into being that large- 
scale production can begin. The establishment of the labour 
market, which, as we have said, is the institution by which 
capitalism performs its second task, requires, not only that the 
workers should be free that they should not be possessed by 
any overlord or master but also that they should neither possess . 
nor have free access to the means of production. In other words, 
when the middle class freed the workers from the landlords 
they had to, and did, take very good care to free them from the 
land as well. 

We must now examine the methods by which capitalism ful- 
fils this vital condition for the establishment of a labour market. 



42 THE COMING STRUGGLE FOR POWER 

Historically, there have been two ways in which the workers xsan 
be disembarrassed of the means of production. In the first place, 
their took, materials and natural resources can be quite frankly 
and straightforwardly taken from them. This is the older 
method. It is the method of the English " enclosures," for ex- 
ample. What happened, and went on happening quite steadily 
for about four hundred years, was that the land of England, 
which towards the end of feudalism was tending to become the 
property, partly the individual property, partly the common 
property, of the English peasants, was taken away from them 
by a new set of landlords. After other expedients had been ex- 
hausted, this was done ih due form, quite legally, by special 
laws Enclosure Acts passed by Parliament expressly for the 
purpose. The new landlords were not the old feudal overlords 
who had in the middle ages held the peasants in various degrees 
of open servitude, but a new class of agricultural entrepreneurs, 
who had supplanted the old feudal nobility. True, they were 
very soon ennobled, and have become the British aristocracy. 
But, as we have seen, their origins were highly commercial (and 
this is why they never afterwards disdained trade). They origin- 
ally made their money about the fifteen-hundreds by taking 
Church and peasant land and turning it into sheep-runs. They 
made their money out of wool. (Thus, economically speaking, 
it is not only the Lord Chancellor but the whole House of Lords 
that should sit upon the woolsack.) 

Stated thus baldly it seems difficult to understand how such 
forcible seizures of land, which in one form or another took place 
all over Europe, by a small new class, can have been possible. 
Why did not the peasants rebel ? The first answer is that they 
did rebel. They rebelled in the long series of peasant risings 
which marked the first hundred and fifty years of the process, 
and which were only suppressed with difficulty. 

The more interesting answer to this question, however, will 
lead us on towards a consideration of the other, and to-day far 
more important, method by which the means of production can 
be alienated from the workers. (For cleared and drained land, on 
which human labour has been expended, is of course only the 
oldest and most important of the means of production.) The 
English enclosures, however ruthless, were not an economically 



CAPITALISM AND THE MARKET 48 

reactionary policy. On the contrary, they were universally 
associated with improvements in agricultural technique. Sheep- 
farming, for example, was no doubt in itself the most " econo- 
mic " use that a good deal of English land in the sixteenth cen- 
tury could be put to. Again, not all the land enclosed, especially 
in the seventeenth and eighteenth centuries, was laid down to 
sheep pasture. A great deal of it continued to be cultivated, but 
to be cultivated on a far bigger scale, far more scientifically and 
so more economically than ever before. The enclosures were a 
great process of agricultural rationalization. This technical 
progress offered at once an overwhelming incentive for the en- 
closures, and by increasing the real productivity of labour made 
possible an advance in the national wealth. It did so by this 
very act of " freeing " agricultural workers from their work on 
the land ; and at the same time it created the surplus wealth 
(from the more profitable agricultural exploitation) which should 
re-employ these new " free " hands at something else. But before 
that " something else " which could only be industry and 
commerce could develop a considerable proportion of the sur- 
plus peasants had perished. This is the first simple and frank 
method. It consists in just taking the means of production away 
from the workers. 

The second method by which the worker can be dislodged 
from his tools is far less frank and obvious. Once the capitalist 
system has got going in any particular sphere of production, in 
agriculture, or in cotton spinning, or in building, or in what you 
will, large-scale technically advanced forms of production are 
soon established. For the growth of trade, that is, of exchanges, 
at once requires and renders possible an ever-growing specializa- 
tion of production. Nothing, however, is more obvious than that 
this growing specialization and division of labour in turn pro- 
motes technical development and progress. For example, the 
cobbler will make better shoes and will find that it pays him to 
use better tools in making them, for he will keep his tools in 
constant use, than will the peasant farmer who tries to make 
his own shoes in his spare time. And technical development, it 
is universally agreed, at once requires and promotes large-scale 
production. Indeed there is a well-graduated and well-known 
scale in the size of the JUJiit _Q production all the way from the 



44 THE COMING STRUGGLE FOR POWER 

Ford works at Detroit to the handloom of Mr. Gandhi's model 
peasant. It is, on the average, a quite direct ratio : the more 
complicated, the more mechanized, are the methods of produc- 
tion at a given time and place, the larger are the constituent 
factories, mines, workshops, the more capital they embody per 
unit of production. 

-After some considerable amount of capital, some considerable 
collections of the means of production, that is, have once been 
got together, the products of these new technically advanced 
wage-worker-employing enterprises begin to compete on the 
market with the products of the individual handworkers, who 
still own the far simpler means of production which had for- 
merly been all that had been necessary in the trade in question. 
There can of course be only one end to such competition. The 
handworkers are first reduced to starvation and then driven out 
of the market. They have to sell their now hopelessly obsolete 
means of production for scrap : they become the raw material of 
wage-workers, namely workers with no power to produce for 
themselves, and with only their power to labour to sell. The 
classical example of this process is the ruin of the handloom 
weavers by the rise of the large-scale mechanized Lancashire 
textile industry. Observe, however, the fundamental difference 
in this method of divorcing the worker from his means of pro- 
duction and the former direct method of primary accumulation. 
In the case of the former method, it was the new landowner, a 
definite human person, who did the job by, for example, 
putting up a most tangible fence round the land he was enclosing. 
In the second case, however, no particular person appears on the 
scene at all. The handloom weavers were not dispossessed, in any 
direct visible way, by the Lancashire millowners. What seemed 
to them to be ruining them were not the millowners, but the 
millowners* products : not the cotton kings themselves, but 
their cotton cloth. (And the early revolts of the industrial 
workers were directed against the machines which produced the 
stream of commodities which seemed to be dispossessing them, 
instead of against the machine-owners.) Once again a relation- 
ship between people disguised itself as a relationship between 
things. And this second method is the way in which in recent 
times by far the greater proportion of the workers have been 



CAPITALISM AND THE MARKET 45 

divorced from the means of production. The method is obviously 
in every way preferable to the dispossessors. It has all the im- 
pressive impersonality of a law of nature. Indeed, it is always 
spoken of by the theorists of capitalism as " an inevitable pro- 
cess." It has, too, an air of voluntariness about it. There is 
nothing, the lawyers will assure him, to prevent the handworker 
from continuing to work for himself with his own tools, and thtls 
continuing to enjoy the full product of his labour. It is merely 
that there is now a wealthy gentleman in the field, who will offer 
him a rate of wages which, though admittedly it means a profit 
to the wealthy gentleman, may exceed what the worker can now 
make for himself. But it is entirely a matter of free choice for 
the worker. 

The worker has, of course, only this choice to go and work 
for wages or to starve. For the competition of machine-made 
products has reduced the value of what he can produce himself, 
with his own tools, to below what he can possibly live on. 
Since, however, this is a form of economic instead of legal com- 
pulsion it does not officially exist. The worker does not know 
what has hit him : he only knows that from being an inde- 
pendent unit of production working on his own for the market, 
he has suddenly become a propertyless man ; that he has now 
no way of earning his living but to induce an owner of the 
modern and efficient means of production to employ him for 
wages. 

By these two methods then, and principally by the second 
one, the capitalist system " frees " the wori&r from his means of 
production. The second condition for the establishment of a 
labour market is thus achieved. It is at this precise point, when 
a large mass of " free " workers free, indeed, of everything 
except their skins has at length been created that the market 
becomes sufficiently free to allow of the functioning of a fully 
developed capitalist system. Capitalism may be said to. exist 
when the principle of the free market has been extended to the 
labour market : when, by the freeing of the workers, alike from 
serfdom and from their ability to work for themselves, a large 
mass of workers willing to hire out their power to work has come 
into existence : when man's ability to work has, therefore, 
become a commodity to be bought and sold on the market. 



46 THE COMING STRUGGLE FOR POWER 

For then and not till then, does large-scale capitalist production 
become possible. It is appropriate to begin to use the word 
capitalism to designate this particular stage in the development 
of the market, since, as it marks the achievement of large-scale 
production, it also coincides with the mobilization of large 
pooled aggregates of capital, either in the hands of an indi- 
vidual entrepreneur, or a group of entrepreneurs, or latterly, 
by means of the sale of shares, in the hands of wide sections of the 
possessing class. Henceforward, it will be necessary to own 
large aggregates of capital large, complex and expensive means 
of production, that is before independent production for the 
market is possible. 

It was then by these summary methods that capitalism solved 
the second great problem of social co-operation. That problem 
was how, after the dissolution of all feudal ties, the thousands of 
now free and independent workers were to be induced to engage 
in the collective labour of the modern factory. The solution is 
clear. The worker is brought into the factory by being prevented 
from working, and so sustaining life, outside it. And this is ac- 
complished by a small number of persons appropriating, 
originally by the use of force (usually the force of the State 
machine of which they have got control), the increasingly cen- 
tralized means of production. Once the process has begun, how- 
ever, it extends itself automatically, since the new compara- 
tively large-scale, centralized means of production in the hands 
of the few send their relatively " mass produced " products into 
the market to compete with, and so drive off the market, the 
products of the small decentralized means of production whic& 
still remain in the hands of the many. Thus the number of 
workers continually being " freed " for involuntarily co- 
operative production in the centralized factories of the few, is 
constant^ Being increased. A labour market, in which these 
workers must perforce sell their power to work, establishes 
itself. And once a condition of things has grown up in which a 
large class of persons habitually do sell their power to work, the 
problem of securing collective work at a common task has been 
solved. For once a man has sold his power to work, he has re- 
linquished any pretensions to controlling what tasks he shall 
work at. He, and any desired number of his fellows, are set to 



CAPITALISM AND THE MARKET 47 

work by the purchaser of their labour power at any given 
common task. 

If we consider this whole process from another point of view, 
we shall see that it is the process of the accumulation of capital, 
Capital accumulation is also of two kinds. There is first the 
process which is usually described as primary accumulation. 
This is the other aspect of that direct, forcible, dispossession of 
the workers from the means of production which we have des- 
cribed. It may take several forms : the necessary capital may be 
acquired by the plunder of peoples subjected by conquest. This 
was the method of Cortes, Pizarro and the other Conquistadors 
in the Americas, or of Cromwell in Ireland. Or, the means of 
production may be acquired by the usurpations of nobles who 
enclose the land of peasants. (Virgin land is not a means of 
production, any more than is coal lying unworked in the earth : 
but cultivated, drained land with agricultural equipment upon it, 
does constitute an essential instrument of production.) What 
then constitutes the category of primary accumulation ? It is 
that the accumulation is accomplished not by the extinction or 
absorption of small masses of capital by the competition of big, 
but by the initial, forcible, collection of the relatively big masses 
of capital necessary to start the competitive process. 

When once this primary stage is over, the accumulation of 
capital goes on, as we have shown, automatically. For the 
further accumulation of capital is identical with the second 
method of freeing the workers from the means of production. 
We showed that the bigger masses of capital will inevitably ac- 
cumulate faster than the smaller, because the bigger will be 
able to produce goods cheaper than will the smaller, and so will 
make more profit. But this is only another way of saying that 
the owners of these bigger masses of capital will retain for them- 
selves a higher proportion of the values created than can the 
owners of the smaller masses of capital. Thus, the accumulation 
of capital, and the creation of a free market in the power of men 
to work, are one and the same process looked at from two dif- 
ferent points of view. 

We have now described the methods by which capitalism 
accomplished the two tasks, which, we saw, faced a social system 
compatible with large-scale methods of production. It was by 



48 THE COMING STRUGGLE K)R POWER 

these means that the middle class solved the problem of or- 
ganizing production. The job has only been done by means of 
the appropriation of the means of production by a single class. 
Thus, alone, have they been centralized : thus, alone, have 
enough of them been accumulated to make modern large-scale 
production possible. 

The process has involved the splitting up of society into two 
opposed classes. Capitalism has only secured collective labour at 
the common tasks of factory and mine, by creating, on the one 
hand, a category of persons who live by virtue of their owner- 
ship of the means of production, and, on the other hand, a 
category of persons who live by selling their power to labour. 
A society, totally different from any which might have been 
expected to result from the overthrow of feudalism, has been 
created. 

The early theorists of the middle class especially the most 
influential of them, Rousseau had envisaged that after the fall 
of feudalism there would arise a society of small independent 
producers for the market. We have seen, however, that no 
sooner had the middle class succeeded in dissolving the social 
ties of feudalism, than the growth of large-scale industry, itself 
inevitably springing from the competition of free producers for 
the market, involved the concentration of the instruments of 
production which had been scattered and individualized at the 
fall of feudalism. And so, before ever the relics of feudalism had 
been cleared away, there began to appear, not a homogeneous 
society of free and equal producers for the market, but its very 
opposite. There began to appear a society sharply split up into 
two classes : on the one hand, the owners of capital, and, on the 
other hand, the wage-workers. Such was, and is, the funda- 
mental character of the society called capitalist, which has 
succeeded feudalism. It bears no resemblance to the promised 
land of Rousseau and his disciples. Instead of the destruction of 
all monopoly, a new category of monopolists, the monopolists 
of the means of production, has arisen. Instead of personal free- 
dom for all men, there has been created for the great majority of 
men a new and far more extensive form of dependence, all the 
more extreme for being concealed. Instead of civil liberty, there 
is a daily and hourly compulsion upon the great mass of the 



CAPITALISM AND THE MARKET 49 

population which is much more pervasive and effective because 
it is economic instead of legal. Instead of the principle of private 
property guaranteeing to the worker the fruits of his labours, 
that very principle has become an impassable obstacle for ever 
preventing him from obtaining them. 

Thus, when the accumulation of capital brought the middle 
class face to face with the necessity of organizing large-scale 
production, it was only able to achieve its purpose at the cost 
of repudiating, in economic practice, all those principles of social 
justice to which it had appealed so successfully in its struggle 
with feudalism. 

In this chapter, an analysis has been submitted of how the 
overthrow of feudalism, and the establishment of the free 
market, has resulted in that system of society under which we 
live to-day. For our society is certainly very different from 
anything which might have been expected to result from such 
a process. We have suggested that the fundamental fact about 
capitalism is that, although it was established in the name of 
free exchange, although its armies fought under banners in- 
scribed with the words Liberty, Equality and Fraternity, yet 
it has inevitably developed into a society sharply divided into 
antagonistic classes. For the members of the middle class, having 
destroyed the feudal monopolists, became themselves the exclu- 
sive owners of the means of production : they became, in fact, 
the capitalist class as we know it to-day, and henceforward we 
shall use this term to describe them. For after the fall of the 
feudal aristocracy, the term middle class becomes misleading. 



DP 



PART II 
CAPITALISM TO-DAY 



CHAPTER III 
Monopoly 

"He FJ. D. Rockefeller] is the supreme individualist working out 
individualism to its logical end in monopolization." 

MB. H. o. WELLS in The Work, Wealth and Happiness of Mankind. 

IN this part of our argument we are not concerned with any 
theoretical analysis of the inherent characteristics of capitalism* 
This chapter, and the three which follow it, are, on the contrary, 
devoted to a discussion of what has happened to capitalism 
during the period in which it has constituted the world's pre- 
dominant economic system. We shall describe, in the first place, 
the condition of capitalism to-day and, secondly, the views and 
theories of capitalist economists as to how the present difficulties 
of their system can be surmounted. Then we shall be in a 
position to see whether these difficulties bear any relation to the 
foregoing account of the birth of capitalism. 

Now it will not be disputed that capitalism is to-day show- 
ing certain marked characteristics. First, there exists a strong 
tendency to the growth of monopolies of various sorts. Second, 
nationalism has become a dominating factor in the world situa- 
tion. Third, what appears to many observers to be a technical 
defect in the working of capitalism has become more and more 
apparent : money has become to an increasing extent what is 
called " unstable." And fourthly, capitalism has become more 
and more subject to the recurrence of crises, during which pro- 
duction is seriously interrupted. We shall discuss these phe- 
nomena in turn. And we shall enquire whether they bear any 
relation to each other. 

The subject of this chapter is the growth of monopoly. We 
are not here concerned with monopoly in the sense in which we 
used the term in the preceding chapter. It is not a question of 
the owners of the means of production having collectively, and 
as a class, monopolized those means of production. What we are 
here concerned with is the possibility of one particular owner, 
or one particular association of owners, monopolizing the pro- 
duction of a particular commodity. And by monopolizing that 
commodity, we shall mean securing a sufficiently exclusive 



54 THE COMING STRUGGLE FOR POWER 

share of the existing means of production of that commodity to 
suspend, more or less completely, the ordinary laws of competi- 
tion. Thus the price of the monopolized commodity will no 
longer depend on the law of supply and demand. On the contrary, 
within wide limits it will depend on the variously motived 
decisions of the monopolists. Whenever a monopoly is created, 
the price-determining mechanism of the market is destroyed 
in that particular field of economic activity. Monopoly then 
is the deadly enemy of the market. Indeed, in the form of 
feudalism, monopoly was, as we have seen, the original enemy 
of the market. Feudalism had to be vanquished before the 
market could be established. But monopoly is like Cerberus : 
strike off one of its heads and a new and yet more terrifying 
one grows instantly in its place. Even before feudalism had 
finally vanished, vast monopolies, in a new form, had begun 
to arise. 

It does not, surely, to-day require demonstration that a whole 
new category of capitalist monopolies has in fact arisen. It would 
be alike tedious and unnecessary to write many pages enumerat; 
ing the names of existing monopolist and semi-monopolist 
organizations. For no one will be found to deny the existence 
of trusts, cartels, state monopolies, municipal monopolies, bank- 
ing monopolies, holding companies, interlocking directorates, 
price-fixing agreements, and all the other almost innumerable 
forms of combination which are to-day one of the most striking 
facts about the economic organization of the world. 

Let us first, very briefly, describe the factors which have led 
to the rise of these monopolistic organizations. We can then 
consider the question of the extent to which monopoly has, in 
fact, superseded free market conditions. 

'The older economists of capitalism used themselves to point 
out that, " wherever there is competition there can be com- 
bination.'* There can be, and there is. No sooner has capital 
been accumulated to a considerable extent than the free and 
independent producers for the market, who are not now, as we 
have seen, the individual citizens of the community, but are the 
individual capitalists, each with his retinue of dependent wage- 
workers, begin to " get together." They do so for several excel- 
lent reasons. In the first place, the combination of independent 



MONOPOLY 55 

itrepreneurs is, in fact, simply a continuation of that tendency 
towards the accumulation of capital for large-scale production 
which is a consequence of the establishment of the market itself. 
For large-scale production needs large and expensive means 
of production ; that is to say, it needs a large amount of capital. 
This capital may be obtained in the course of the productive 
activities of one particular successful business. 1 In this case it is 
obtained from that part of the values created which the owner 
of the means of production does not pay back to the workers. 
A part of this annual surplus is put back into the enterprise each 
year as new capital. 

Another method, however, is to pool the resources of two 
hitherto competing enterprises. A successful firm which is in 
any case rapidly expanding its capital equipment, as a result of 
its own operations, will like to absorb a smaller competitor. 
For, by doing so, it can hasten the speed of its own development. 
The smaller, less successful, firm has often no choice in the 
matter. It is being left behind in the race for more and more 
elaborate equipment. Thus its competitive power is decreasing. 
Sooner or later it will be bankrupted by its more successful rival, 
if it does not sell out while it still has something to sell. It must 
be eaten now or die out in the cold later on. Thus both firms have 
good reasons for combination. And such combinations are, in 
fact, continually taking place. Capital, then, is continually 
being concentrated : more and more of it, that is, is used in any 
given enterprise. And at the same time capital is being cen- 
tralized ; that is to say, it is passing into the hands of fewer and 
fewer effective owners. And the two processes hasten each 
other.* 



1 Here and throughout, I follow the usage of most writers on economics oT 
whatever school and make the term '* productive activity " cover such work as 
the transport and distribution of goods. 

2 It is quite true that claims to a participation hi the profits of the great modern 
centralized and concentrated enterprises are now, by means of the sale of shares, 
quite widely distributed amongst members of the property-owning class. But it 
is very naive to suppose that this constitutes any diffusion of effective ownership 
or control. A small shareholder, or indeed the whole body of small shareholders 
collectively, in a great modern company, have about as much control over it as 
they have over the Grand Llama of Tibet. They take what dividends the directors, 
who own the controlling blocks of shares, like to pay them, and read, devoutly, 
the financial columns of their newspapers, where City editors tell them what the 
big capitalists want them to think. 



56 THE COMING STRUGGLE FOR POWER 

Thus far, however, the process of combination can go on 
without the realization of monopoly in the supply of a given 
product. When, however, the twin tendencies of concentration 
and centralization of capital have gone a certain distance, the 
units of production in the given industry will have become 
large and few. Yet competition between these large remaining 
units will still be going on. Now, however, it is a case of competi- 
tion between a few formidable competitors. The stakes of the 
contest will have been raised. For each of the remaining firms 
will have made heavy capital investments. If they are defeated 
in their trade war, they stand to lose many thousands of pounds. 
Thus the hazards of unrestricted competition will decreasingly 
appeal to them. 

Free competition, the classical economists teach us, is " the 
antiseptic of trade." This wonderful device, we are told, prevents 
the selfish instincts of individual business men from exploiting 
the community. The free play of competition ensures that all 
economic activity shall be automatically directed to the maxi- 
mum possible benefit of the community. To business men, how- 
ever, engaged in a hazardous and desperate trade war, in which 
all they possess is at stake, competition is more likely to appear 
as a very hard master. In fact, the uncontrolled play of the 
market affords a very rough and ready method of adjusting the 
unco-ordinated activities of the producers to the needs of 
society. It does so only by periodically bankrupting a certain 
number of them. Thus business men, in a genuinely competitive 
industry, are kept in the fear of imminent ruin in a state, that 
is, of the greatest possible instability. 

Now that production has become very large in scale, however, 
instability is a much more serious difficulty than ever before. 
The huge expensive plants which have become necessary bring 
ruin not wealth to their owners if they cannot be operated 
steadily and regularly. Such regularity, and the security which 
It alone can bring, can only be achieved, it seems to business 
men, by the abolition of competition within their branch of 
production. Is this, however, so difficult ? Surely not, say up-to- 
date capitalists, intent upon the making of " mergers." The 
producers in the particular industry in question have been re- 
duced to a small number of large concerns. Let them but " get 



MONOPOLY 57" 

together," either by outright amalgamation or merely by a 
cartel or price-fixing arrangement, and all the terrifying dangers 
and chances of competition can be eliminated. In practice, 
moreover, no rigid written agreement may be necessary. When 
the number of competing firms has dropped to, say, half a dozen, 
competition may simply die out of the industry of itself. A con- 
ventional price for the product may be established. Different 
territorial divisions of the market will become more and more 
the exclusive property of particular firms. And all the organiza- 
tions concerned, dreading the rigours and risks of renewed strife, 
may be glad, for a time at any rate, to become economic paci- 
fists, content with a share of the market rather than willing to 
risk all to gain all. 

Hence the desire for stability, grown stronger with the growth * 
of large-scale production, is one of the most important motives 
for the elimination of competition and the formation of monopo- 
lies. 

Secondly, there exist many spheres of economic activity 
within which the principle of competition cannot operate, at 
any rate fully. There is, for example, a special tendency to 
monopoly in the case of the supply of gas, water, and electricity 
to a given city or part of a city, and, to a large extent, in the 
case of railway transport between great cities. For in these fields 
competition is especially wasteful and the technical advantages 
of providing the service by means of a single unified organiza- 
tion are especially great. In many cases, these activities were 
carried on by monopolies from the beginnings of capitalism. 
Thus they served as examples of monopolies, and their advant- 
ages, to their owners. Moreover, and this is an exceedingly im- 
portant point, they drew the State towards an intervention in 
economic affairs. For clearly the persons who happened to own 
these technical monopolies could not be left to exploit everybody 
else at their own sweet will. For example, it has been from the 
outset necessary to regulate railway charges by law. The exist-* 
ence of this special tendency to monopoly in certain economic 
activities qualified from the beginning the application of the 
principle of free exchange. The State was, in fact, unable to main- 
tain that perfect aloofness from economic affairs which was 
prescribed for it by the theorists of the market. And these 



58 THE COMING STRUGGLE FOR POWER 

initial examples of state interference led to wider interferences 
later on. 

* Last but not least, of course, business men form monopolies 
in order to get monopoly profits. They feel the whip of competi- 
tion most cruelly upon their backs. They dream of a stable, 
easy, quiet, and limitlessly profitable world, from which the 
demons of price-cutting and competition in all their forms, have 
been finally exorcised. They innocently suppose that they have 
only to combine instead of to compete in order to achieve such 
a capitalist paradise, that the process of amalgamation has only 
to be pushed to its logical conclusion in order that all capitalists 
should enjoy the pleasures and profit of monopoly. They have no 
suspicion that such a conception is self-contradictory : that 
existing monopolies only find themselves in a favourable posi- 
tion just because the rest of production is still being subjected 
to the pressure of competition. A monopolistic industry sucks 
its extra profits from other free competition industries around 
it. (For example, a mining monopoly could fix the price of coal 
at a figure which would appropriate all the profits of the steel 
industry.) But if all industries were monopolies, there would be 
no areas of free competition to exploit. We shall examine this 
whole question, however, at a much later stage in the argument. 
It is only necessary for our immediate purpose, to prove the 
inevitable character of the growth of monopoly. For the fact of 
its growth is not in dispute. For example, an eminent ex-official 
of the League of Nations, Sir Arthur Salter, has recently pub- 
lished a book on the present crisis, under the optimistic title 
Recovery. We shall refer to his arguments on several future 
occasions ; his evidence is of special interest, since he is a devoted 
supporter of the principle of free exchange by means of the 
mechanism of the market. On the question of monopoly, he writes : 

" In every form of human activity indeed there is an in- 
* stinctive dislike of standing completely naked before the full 
blast of competition. The etiquette of professions like the Bar, 
medicine or the Stock Exchange, the growth of combines, con- 
trols, monopolies and understandings as to prices, are ex- 
amples within the sphere of private organization. And this 
has been supplemented by an ever-increasing use of the 



MONOPOLY 59 

power and mechanism of the State, which has given the pro- 
tection of tariffs and the aid of bounties. The full flood of 
competition has been canalized, locked, dammed and diverted 
from its natural course." 

We now come to a consideration of the extent to which com- 
binations of all sorts have, in fact, abolished the free market. 
Let us first consider the growth of combination in the land of the 
purest and least qualified form of capitalism, in America. Now 
one of the most reliable indications of the growth of combina- 
tion is to be found in the efforts of the rest of the community, 
fearful of exploitation, to restrain that growth. In particular, 
the old independent producers for the market, above all the 
agriculturalists, are sure to put up a fight against the rise of 
industrial monopolists. Hence, just as America is the home of 
the trust, so also is it the home of the " trust busting." Towards 
the end of the last century, American trusts had become suffici- 
ently threatening for the independent producers, who were still 
politically dominant, to attempt to stop their growth once and 
for all. They succeeded in passing the inter-state Commerce 
Law of 1887 and the Sherman Anti-Trust Law of 1890. Had 
these measures been observed, they would have prevented any- 
thing like a nation-wide, or Federal Trust. Partly no doubt by 
means of the successful " lobbies " of the trusts, these laws were 
for a time allowed to fall into disuse. Then, just after the turn 
of the century, they were suddenly revived and their enforce- 
ment attempted by President Roosevelt. This was no doubt a 
piece of presidential demagogy, yet Roosevelt, who was a most 
accomplished demagogue, would never have chosen such a 
policy if there had not been strong forces remaining in America . 
which feared and hated the trusts. And he actually succeeded, 
be it observed, in breaking up, at any rate nominally, some of the 
greatest of these organizations, including the vast Standard 
Oil Company. This success marked the high-water mark of the. 
efforts of the anti-trust forces. (There had been before, however, 
and there were to be again, similar movements on the part of the 
independent producers west of the Mississippi. These move- 
ments, it is interesting to observe, reached their peak point of 
activity at the bottom of every cyclical trade depression and 



60 THE COMING STRUGGLE FOR POWER 

were dispersed almost completely by the warm waves of pros- 
perity at the top of every boom. Thus, we have the Granger 
movement of the seventies, struggling against railway mon- 
opoly ; the Populist or non-partisan movement of the nineties 
and the Farmer-Labour movement of the early nineteen- 
twenties.) All these movements marked the efforts of the small 
independent producers to protect themselves against the 
monopolists. Their forces comprised the farmers, the smaller 
industrial producers, the lower middle class generally ; and, to a 
large extent, they carried working class support with them. 
Between them, they managed to achieve the intermittent en- 
forcement of the Sherman Law, Open amalgamations creating 
anything like a nation-wide monopoly were, and still are, fairly 
effectively forbidden. Nor is this the only anti-monopolist pro- 
vision of American law. Almost equally important is the prohibi- 
tion of branch banking, so that nothing like the " big five " 
British Joint Stock Banks, with their virtual monopoly of all 
internal banking operations, can be created. 

The Sherman Law, and the further anti-trust provisions are, 
however, to-day the subject of hot debate in American business 
circles. The trusts are pressing for their abolition. It is true that 
ways and means of circumventing them have been developed. 
Still they represent a real hindrance to the further development 
of monopoly. And, for the first time, monopoly is the open and 
avowed object of one school at least of the leaders of American 
capitalism. Not that they use the term. On the contrary, the 
arguments of this school do not lack plausibility. Some of the 
most up-to-date American business men can often be heard to 
express themselves somewhat as follows. " Competition and the 
free market in modern conditions of ultra-large-scale produc- 
tion, involve intolerable instability. They precipitate appalling 
economic crises, such as the crisis of 1980. Is not the only way 
to avoid such crises to set to work consciously and systemati- 
cally to plan our economic system ? Planning is the keyword 
of luture economic development. By the consciously planned 
development of America's unrivalled natural resources, the 
future of the Republic can alone be secured. In order, however, 
to achieve such planning to fit production to demand, to share 
out raw materials, to dovetail industry and agriculture, to 



MONOPOLY 61 

ensure the right proportion between the production of capital 
goods and consumers' goods you must give us leave to com- 
bine and to merge to a far greater extent than ever before. For 
example, you must abrogate the Sherman Acts, the prohibition 
of branch banking, and the Inter-State Commerce Commission 
must allow wholesale railroad mergers," (The best exponent of 
this policy is Mr. Owen D. Young of the General Electric Cor- 
poration.) Such ugly words as monopoly are never mentioned, be 
it observed. Yet the realization of monopoly is, of course, the 
underlying object of the whole programme. And necessarily so. 
For Mr. Young and his colleagues are quite right in saying 
that economic planning is quite impossible while capitalist com- 
petition exists. (But has Mr. Young ever asked himself whether any- 
thing would be left of capitalism, if competition was eliminated ?) 
Considerable obstacles still exist, however, to the realization 
of any such programme. America is still an agricultural country 
as to some 25% of its population and her farmers are most justly 
suspicious of entrusting their supply of essential industrial goods 
to a series of gigantic, interlocked, and tariff-protected capitalist 
monopolies. The old creed of American Populism is still strong 
in Congress. The whole American hinterland west of the Missis- 
sippi is still deeply suspicious of the new scientific " planners.'* 
(And it may be that in the autumn of 1932, Governor Roose- 
velt, a soberer Bryan, will ride to success on the waves of petit 
bourgeois discontent, to become that somewhat rare and usually 
most unfortunate creature, an American Democratic President.) 
Thus it is very doubtful if this new school of " business execu- 
tives " will succeed in obtaining a sort of legal enfranchisement 
of the trusts. It does not vitally matter to them, however, 
whether they succeed or not. (And so their efforts in this direc- 
tion will probably not be unduly persistent.) The Sherman Law, 
it is true, does fairly effectively prohibit the simple, direct merg- 
ing of one company in the same line of business with another 
steel company with steel company, oil company with oil com- 
pany, etc., etc., at any rate on a nation-wide scale. These plain, 
straightforward, " horizontal " amalgamations are often to-day 
legally impossible. But " the resources of civilization are not 
exhausted," as Mr. Gladstone once remarked on a less important 
topic. Let us give an imaginary example : Company A cannot 



62 THE COMING STRUGGLE FOR POWER 

marry Company B. A stern (fairly stern) judiciary forbids the 
banns. Company A, however, banks with the great New York 
finance house of X. In the course of time and overdrafts the 
finance house X comes to own and control Company A. Is there 
now anything in statute law or in equity which forbids the 
finance house X from acquiring 51% of the shares of Company 
B and thus controlling it also ? There is not. And if X equals 
Morgans, it does so. By what it may be pardonable to describe 
as a morganatic marriage, Companies A and B are united, and 
presumably live happily ever afterwards. Innumerable such 
marriages have taken place and ever new ones are being ar- 
ranged. In general, therefore, it may be said that though Ameri- 
can companies and corporations appear on the surface to stand 
in splendid isolation, their roots interlace and intertwine in an 
incredible labyrinth. It is impossible to follow every hidden root, 
but visibly a high proportion of them draw their nourishment 
from one or two great central reservoirs of capital, the Eastern 
Banking and Finance Houses. Moreover, the great banks them- 
selves are not necessarily independent institutions. Such and 
such a bank is " a Morgan firm," another " a Rockefeller in- 
stitution," a third " a Mellon house." I make no pretentions of 
offering a thread to the labyrinth. Some of the greatest corpora- 
tions are, however, well known to be anything but independent. 
U.S. Steel, for example, which is perhaps the largest single in- 
dustrial enterprise in the world, is a 4t Morgan " firm. The Rocke- 
feller Bank the National City is certainly not unconnected 
with those various Standard Oil Companies into which Mr. 
Rockefeller, obedient to President Roosevelt, ostensibly split 
himself up. Naturally this remarkable process of weaving to- 
gether the entire economic life of a continent is far from com- 
plete. There are still outstanding examples of independence. Mr. 
Ford, we know, is genuinely independent. The very prominence 
of that example, however, betrays its loneliness. Nor is any 
simple formula, such as " The banks own the industries " or 
" The industries own the banks," or " Morgan owns the whole 
country," an adequate description of the situation. Sometimes 
the banks own the industries, sometimes the industries own the 
banks, sometimes there is an alliance. Sometimes the point of 
junction between the baaks and the industries is a single human 



MONOPOLY 68 

being (Mellon) ; sometimes it is a family (the Rockefellers), which 
owns both banks and industries. What, however, is indisputable 
is that the whole of American economic life is steadily coalescing 
and congealing into a vast conglomerate mass from which com- 
petition tends to be expelled. And this vast organization is ever 
striving to become coterminous with the State itself. Hence, it 
does not seem that the trusts will fight to the death against the 
Sherman Act, and the other anti-monopoly statutes. They can 
pursue their policy, less conveniently and directly, but far more 
discreetly, by more devious courses : by fusion with the banks and 
finance houses ; by the close interlocking of directorates ; by a 
dozen devices suggested by the ingenuity of corporation lawyers. 

We have taken America as an example of the growth of 
monopoly within a capitalist state, partly because of the partic- 
ularly dramatic way in which events have developed there, and 
partly because of an interesting point which American experience 
goes far to prove. It is often said that the growth of monopolistic 
forms and the curtailment of competition and the free market 
generally is due to Government interference with business to 
tariffs, subsidies, municipal development, chartered enterprises 
and the like. Yet, with the important exception of tariffs, 
America has been the classic land of laissez faire. The Govern- 
ment has kept most strictly out of business. (It would not, how- 
ever, be true to say that business has kept out of the Govern- 
ment.) Yet America has been the continent of the trust. True, 
there has been the tariff, and undoubtedly the tariff has sheltered 
and fostered the trusts. Historically, however, it was the trusts 
(under the leadership of Mark Hanna) which created the tariff, 
not the tariff which created the trusts. In any case, the U.S.A., 
as the free traders used, before 1929, to remind us so often, is 
" the largest free trade area in the world." Consequently, it seems 
clear that the growth of the trusts, and the whole tendency to 
monopoly is, as we have argued, something inherent in the 
development of capitalism, and not something imposed on it 
by the State. 

Let us now consider the growth of monopoly in Great Britain. 
No one denies that the State often does play a very large part 
in the promotion of combination. In post-war Britain, for ex- 
ample, it has played a very large part indeed. There is, it is true, 



64 THE COMING STRUGGLE FOR POWER 

plenty of private amalgamation going on. And in some instances, 
at any rate, such direct private amalgamation has secured an 
effective monopoly in the production of a range of commodities, 
viz. the national monopoly of the chemical industry achieved 
by Imperial Chemical Industries and the virtual monopoly in 
the supply of a basic commodity, soap, achieved by Messrs. Uni- 
levers. Innumerable " interfacings " have taken place through- 
out industry, while Joint Stock Banking has passed into the 
hands of five large undertakings which limit competition between 
themselves to minor points. More striking, however, than the 
rise of these purely private monopolies is the fact that the State 
has actually set up monopolies to take over whole new branches 
of production. Four great State-created, and State-protected, 
monopolies have been established since the war. Imperial Air- 
ways practically monopolizes British civil aviation ; Imperial 
Cables monopolizes intercontinental telegraphy ; the British 
Broadcasting Corporation monopolizes the transmitting side of 
the wireless industry ; the Central Electricity Board monopolizes 
the long-distance distribution of electric current. Meanwhile, the 
railways have been regrouped, put under a greater measure of 
State control, and subsidized (1929 Development Act) ; and a 
measure of State control, especially designed to limit competi- 
tion and output, has been established over the vast British coal- 
mining industry (1930 Coal Mines Act). Last but not least a 
tariff, fairly low as yet but showing remarkable powers of growth, 
has been built round these new monopolies for their protection. 
The recent economic history of Germany, however, provides 
the most extreme example of State-formed monopolies. A whole 
new flora of economic forms has blossomed there in the last 
decades. State monopolies, " mixed enterprises," in which the 
State holds some of the shares and private capitalists the rest, 
municipal enterprises, mixed private and municipal enterprises, 
State-controlled trusts, State-controlled banks which in turn 
control private trusts, uncontrolled private trusts, cartels, price- 
fixing agreements a whole bewildering variety of forms has 
arisen, forms which have only this in common, that they are all 
designed to limit free competition. Moreover, the remaining 
ostensibly independent firms are interlocked by the German in- 
dustrial banks which stand behind them all, and to a varying 



MONOPOLY 65 

degree control them all. In fact, German economy in 1982 does 
seem to have come near, though it has not reached, the theo- 
retical goal of the monopolists, viz. a unified whole, with the 
municipalities and indeed the State itself as integral parts. (It is 
worthy of note, however, that even when this extreme degree of 
what can only be called economic coagulation has been reached, 
the dependence of the whole system upon the market has not, 
apparently, been even decreased. For German capitalism has 
suffered fully as much from the crisis of 1980 to 193? as have 
the least highly organized capitalisms.) 

Thus it is clear that in those most advanced industrial states 
of the world, the United States, Great Britain and Germany, 
the growth of a variety of forms of combination and monopoly 
is undeniable. And the same thing is true, though in a less degree, 
of other capitalist states such as France, Japan, Belgium, and 
Czecko-Slovakia. Moreover, it is clear that, at any rate in Europe, 
the State is becoming more and more enmeshed in these new 
economic organizations. Optimistically inclined gentlemen of 
socialistic views often see much to rejoice at in all this. It marks, 
they suppose, a great advance towards socialism when the State 
becomes an integral part of this vast new capitalist network. 
Thus if Herr Schmidt, or Sir Algernon Smith, in his capacity as 
Director of Bank X or Trust Y, lowers the wages of half a million 
workers, it is, they feel, a monstrous tyranny. If, however, this 
able gentleman joins the Government, and as Minister of Com- 
merce takes the same decision, all is well. If a country's eco- 
nomic life is carried on by private and independent trusts, that 
is capitalist tyranny. If, however, the State acquires an interest 
in the trusts, then that is socialism. These optimistically inclined 
" socialists " may not have noticed, however, that this never 
happens until some time after the trusts have taken the pre- 
caution to complete their control of the State. 1 

1 This fact is illustrated by a probably apocryphal story which used to be told 
of Britain 1 s richest man, Lord Rothermere. Lord Rothermere, to satisfy a private 
whim, on one occasion " took up " Hungary, and published a series of articles on 
Hungary's wrongs from his own pen. The Hungarian Government, grateful but 
ill-informed, committed the extraordinary blunder of offering his lordship some 
pecuniary compensation. They were informed by one of Lord Rothennere's 
Junior secretaries that while in Balkan and barbarous parts of the world it might 
be the custom /or Governments to buy newspapers, in all really first-class states 
it had long been the practice of the newspapers to buy the Governments. 

Ep 



66 THE COMING STRUGGLE FOR POWER 

As a matter of fact the question of whether the trusts tend to 
take over the State apparatus or the State apparatus to take 
over the trusts is quite an unreal one. 1 What actually happens 
is that a closer and closer identity between the trusts and the 
State grows up. Naturally they never formally fuse. It is merely 
that the two administrative machines that of the State on the 
one hand, and of the trusts on the other are increasingly 
manned and directed by the same persons. The same men pass 
backwards and forwards between the Ministers' rooms in the 
great departments of State and the chairmen's rooms in the great 
corporations which carry on the nation's economic life. It is the 
most pathetic example of the worship of forms to suppose that 
anything is altered when the State, as it exists to-day, takes 
over the running of an industry. All that has happened is that 
the capitalist class has found it more convenient to conduct this 
particular industry through its governmental apparatus instead 
of through the apparatus of some trust. Since the capitalist class 
owns and controls the governmental apparatus in every whit as 
real a sense as it owns the apparatus of the trust, the change 
makes no important difference to anybody. 

Nor, of course, is competitive private enterprise entirely ex- 
tinguished. It flourishes indeed, it is cultivated in all the 
minor branches of production and distribution. A whole class 
of small entrepreneurs continues to exist a class which cherishes 
many illusions as to its own importance and the most servile 
loyalty to the leaders of industry on whose large-scale enterprises 
its own little ventures largely depend. These fringes of competi- 
tion are merely supplementary to the trusts, and serve both to 
carry on the less profitable or more risky spheres of economic 
life and to screen the real state of affairs from a too curious 
scrutiny. 2 

It is not, of course, suggested that the logical result of all these 
monopolistic tendencies has yet been attained anywhere, or that 

*The State is to-day merely the crowning form of the organization of the 
capitalist class. The committee meeting held, usually bi-weekly, at No. 10 
Downing Street, is the board meeting of the directors of Great Britain Ltd. 

* For example, they enable Mr. Walter Runciman (a British capitalist of the 
Liberal tradition) to tell us that so many thousand independent firms, with so 
many thousands of small capitalists attached to them, still exist. This gives 
Mr. Runciman great pleasure since he believes that he thus refutes the view that 
capital is becoming more concentrated. 



MONOPOLY '07 

indeed it ever will be attained. Nor have certain qualifications 
been ignored. Of these, by far the most important is the un- 
doubted tendency of the great trusts to link up internationally 
across the state boundaries with their counterparts and com- 
petitors in other countries, as an alternative to fusing with their 
own State apparatus. This important question is considered in 
the next chapter. We may observe, however, that while this 
tendency no doubt exists, it is being increasingly overshadowed 
by the tendency to fusion between the State and its own trusts. 
As a matter of fact, international trustification was on the whole 
a phenomenon of capitalism immediately before the war, rather 
than of post-war development. Inter-imperial antagonisms ap- 
pear to have been sufficiently strong, in the post-war period, to 
canalize increasingly the development of combination along 
national lines. 

What has been here submitted is that there exists an inherent 
tendency of individual producers to amalgamate, to form mo- 
nopolistic enterprises, and subsequently for these monopolies to 
meet and pool their resources with those of the national States. 



CHAPTER IV 
Nationalism 

THE second marked characteristic of the present-day capitalism 
is, we suggested, nationalism. Now it will probably be widely 
agreed that the nationalism of all states, great and small, pre- 
sents to-day a major obstacle to the successful working of the 
capitalist system. For the universal growth of nationalism is 
having catastrophic consequences upon the exchange of com- 
modities in the world market. And the creation of the world 
market was, we saw, the crowning application of the general 
principle of freedom of exchange. 

By 1914 the world market, which made possible a real inter- 
national division of labour, had become a dominating fact in 
the economic life of all the more important states. The enormous 
scale of the international exchange of commodities ; the trans- 
ference of large masses of capital from the old industrial states 
for investment in new or backward countries, and the emigra- 
tion of workers to countries of higher wage standards, had gone 
far to make the whole world into a single market to fuse the 
national markets. The working of this world market was, it is 
true, hampered and menaced from the outset by the nationalist 
policy of nearly every state. Interferences with the free play of 
the market, by tariffs and by many other less obvious examples 
of the exercise of the power of the State, were perpetual. And 
such interferences were growing. 

Yet on the whole up till 1914, such was the volume and 
vitality of international exchanges that they flowed over and 
under these interferences. And their volume grew steadily. Then 
came the war. Its coming shattered the world market, and the 
economic history of the post-war years has largely consisted in 
the attempt to rebuild it. About the year 1929, it seemed to many 
observers that this attempt had succeeded. The volume of 
international trade was again steadily expanding. In spite of 
every difficulty, it appeared as if the old system of the interna- 
tional exchange of commodities, with a superstructure of capital 
import and export, of emigration and immigration, was re-estab- 
lishing itself. In 1982, everyone knows better. International 



NATIONALISM 69 

trade has not only failed to expand, but has sunk disastrously 
both in volume and value. At the moment of writing, it is 
drying up in large and important parts of the world. Even if 
recovery comes before capitalism is overthrown in any state, 
it is clear that almost all the work of reconstruction has been 
undone, and that the capitalist world is back where it was in 
1921. 

Nearly all orthodox economists are agreed in substance on 
what has caused the catastrophe. The present (1932) world 
economic crisis is, they tell us, the cumulative effect of all those 
varied, numerous, and extremely vigorous measures of economic 
nationalism which have been adopted by almost every nation in 
the world during the last ten years. How much more widely 
extended throughout the world, how immeasurably more in- 
tense these measures have been than any which have ever been 
attempted before is still hardly realized. A certain British 
economist is said to keep a " tariff map " of the world. Along 
the now innumerable frontiers he despondently lays little raised 
paper walls, of varying heights, indicating the scale of the tariffs 
of each state. Europe, on his map, now resembles nothing so 
much as the cross section of a prison, with each nation cowering 
immured in its own little economic cell. 

Tariffs, moreover, are only the very beginning of the economic 
expedients of nationalism. A whole science, designed for maxim- 
izing the exports and minimizing the imports of each and all of 
the nations of the world simultaneously, has now been ela- 
borated. 1 Import " Quotas," import licences, export bounties, 
subsidized railway rates to the frontier, penal railway rates from 
the frontier, subsidies to export industries of every kind, subsi- 
dized advertising of " home " produced products, the sys- 
tematic placing of all Government and municipal contracts 
" at home," regardless of comparative costs, a whole labyrinth 
of measures for the restriction of international exchanges has 

1 Mr. Neville Chamberlain told us in so many words that this was the principal 
objective of the new British tariffs, which he introduced into the House of Com- 
mons at the beginning of February 1982. No statesman, however, has as yet 
proposed the obvious method of making possible a universal, simultaneous, and 
yet successful, adoption of this policy, viz. the creation of an international dump 
for commodities somewhere in the middle of the Atlantic. This project might be 
placed on the agenda of the League of Nations under the heading of " How to 
make Dumping Safe for Democracy**' 



70 THE COMING STRUGGLE FOR POWER 

been elaborated by the patient and devoted piyil s^y&nts, of 
every nation. Yet even this " administrative protection," as it is 
called, still deals only with the interchange of commodities. 

The next category of the measures of economic nationalism 
consists in the obstacles which have been placed in the way of 
the import and export of capital. Capitalist economists consider 
them to be particularly disastrous since international capitalism, 
as the world knew it before 1914, is, they say, unworkable unless 
the highly developed countries of the world will allow their 
annual surplus of wealth to leave their shores in search of the 
higher rate of profits obtainable in backward countries. 

Great Britain before the war habitually exported her surplus 
capital. She did not confine this export to her own empire. Nor 
did she immediately or invariably attempt to establish political 
hegemony over the countries in whose industries she had in- 
vested. Naturally this moderation was merely relative. British 
imperialism, based in the last analysis on this power to export 
capital, was sufficiently predatory. Egypt was absorbed, the 
South African republics crushed, China dominated, India held 
in a tightening grip. Still vast quantities of capital were in- 
vested in Europe, in the United States, and in South and Central 
America, without too blatant an attempt to dominate the 
Governments of the recipient nations. The decencies were to 
some extent preserved. 

Now, however, the predominant power to export capital is 
passing into the hands of the United States and France. And 
in both cases the investing classes of these countries, and their 
respective Governments, are either refusing to use that power 
at all or are only using it as a direct and open instrument of their 
political policy. France, of course, is an old exporter of capital. 
She has not, however, been a very successful one. A high pro- 
portion of her pre-war export was lost (in Russia, in particular). 
Her peasants have been bitten, and are now exceedingly shy. 
They prefer the modest stocking. Hence, her export of capital is 
certainly far below what it could be in quantity. And what 
there is of it, is directed quite openly for her own political ends. 
Some of it goes to her empire and most of the rest goes to her 
little circle of " clients " in Europe Jugo-Slavia, Poland, 
Roumania, Czechoslovakia. These states are now entirely 



NATIONALISM 71 

dependent upon her and hardly even pretend to an independent 
foreign policy. 

The United States, on the other hand, is a comparatively new 
comer to the field of the export of capital. Up till 1915, she was 
still a capital importing (a debtor) nation. To-day, however, 
those great masses of new capital which should be, we are told, 
revivifying world capitalism can come from her alone. Yet as a 
matter of fact, hardly a dollar emerges ! For about four years 
(1928-1928), it is true, America appeared to be taking to capital 
export on a fairly large scale. And to an extent which is usually 
ignored the temporary world capitalist revival of those years 
took place on the basis of this export. Some of the dollars went to 
South America, and they carried with them the usual implica- 
tion of political domination. They arrived, as it were, in the 
eagle's beak. (American commercial imperialism was, however, 
no more predatory than its British equivalent in this sphere.) 
For the rest, American capital went into Germany on a really 
considerable scale. 

And then, suddenly, the whole outward-flowing stream dried 
up. At first, before the crash, this was because a mania of specu- 
lation in the shares of home industries that seemed, through the 
beaming spectacles of the advertising men, to be illimitably 
profitable, had so seized the whole nation, that, say, an American 
aeroplane share yielding % per annum seemed more attractive 
than a German Government 7% loan at par. Moreover, the un- 
doubted fact that the world had never regained the degree of 
political stability achieved before the war, did justly diminish 
the attractiveness of foreign investment to the American and 
French investing public. The two factors began to react on each 
other. The world remained poor and unstable, for lack of new 
capital, and new capital was not forthcoming because the 
poverty and instability of the world frightened off the potential 
investors. Finally, as the new loans, which continued to be 
made until 1928, failed to restore the economic stability of the 
borrowers, it became clear that their total indebtedness had 
made their position hopeless. The interest charges had mounted 
to a figure which could not be paid or which could only be 
paid by a fresh loan. Thus, in any case, slump or no slump, the 
Americans were sooner or later bound to get tired of making 



72 THE COMING STRUGGLE FOR POWER 

new loans to enable their debtors to pay them the interest on 
old ones. And now, after the great crash, the very idea of sending 
his money thousands of miles across the sea sends shivers down 
the back of the petrified American investor. Above all, it would 
be unpatriotic, it would be, oh ! awful word of opprobrium, 
" Un-American," to invest abroad at such a time as this. Far 
better leave the money lying in an American bank (until, of 
course, that bank fails when the problem of how to dispose of 
the money solves itself). 

Thus, in the field of the export and import of capital also, it 
has been, according to the orthodox economists, the spirit of 
nationalism which has shattered the world market. The United 
States Congress, for example, is at the time of writing (Spring of 
1932) solemnly engaged in pillorying the New York bankers who 
conducted the export of American capital up till three years ago. 
How vile of these Wall Street harpies, it is now said, to have lent 
those good American dollars to corrupt and vicious Europe and 
rebellious South America ! How vain for the bankers to try to 
explain that the cessation of that lending (however corruptly it 
was carried out) was an important cause of the slump. Happy 
Congressmen from broad middle-western acres, you may turn 
from " grilling " your " international financiers " for lending to 
Europe ; and from preventing in advance any signs of generosity 
in the matter of the repayment of war debts on the part of 
your President, to putting in an honest day's work at raising 
the tariff on the more important products of your State. 
Nor is there the least fear that the possibility of there being 
anything contradictory in these activities will ever enter your 
heads. 1 

An ultra-nationalistic capitalism without a considerable flow 
of capital across national frontiers has been, however, sug- 
gested. (And it is clear that the prohibition of international 
movements of capital is the logical corollary of the present 
attempts to obstruct the international movements of com- 
modities.) A certain American writer, Mr. Lawrence Dennis, has 
actually advocated something of the sort in a book which has 

1 Sir Arthur Salter suggests that the only way foreign lending can be re-started 
ia for the American and French Governments to guarantee the foreign loan. 
. One would like to see Sir Arthur Salter explaining his proposal to the Senate in 
Washington and to the Chamber in Paris ! 



NATIONALISM 78 

just been published in New York. 1 Mr. Dennis devotes a great 
deal of time to proving successfully that the principal of foreign 
loans can never be repaid. He also shows that interest charges 
can only be paid while fresh borrowings are being made, or if the 
lending country is willing to allow a permanently " unfavour- 
able " balance of trade. 

Mr. Dennis is able to prove the final logical contradictions 
inherent in foreign lending : but he ignores the fact that capi- 
talism knows no other method of developing the backward areas 
of the world. He can show that foreign lending must always lead 
to a crash. But he is not entitled to deduce from this that 
capitalism could get on better without it. On the contrary, 
international capitalism can only exist by means of foreign 
lending, and the increase in such lending is one of its essential 
methods for staving off crisis. 

We realize this when we compare the views of a capitalist 
writer who is, like Mr. Dennis, a strong nationalist and is quite 
unconcerned with the fate of capitalism elsewhere, if only his own 
country may be benefited, with the views of a capitalist theorist 
concerned for the welfare of world capitalism as a whole. Sir 
Arthur Salter proves quite irrefutably that world capitalism 
must break down unless a perpetual flow of foreign lending is 
maintained. There existed, he tells us, on the authority of the 
British Committee on Finance and Industry (the so-called 
Macmillan Committee) a " gap," some two thousand million 
dollars wide, between what the debtor countries of the world 
could (in 1927) pay to the creditor countries and what they owed 
them. This " gap " could only be bridged by that amount of 
annual foreign lending. And when, in 1928, foreign lending 
stopped, world capitalism fell headlong into the " gap." For the 
actual detonation of the acute stage of the crisis was due, Sir 
Arthur Salter considers, to the cessation of foreign lending (" the 
financial crisis was due to its [foreign lendings] sudden cessa- 
tion "). Sir Arthur Salter exactly describes the nature of the 
capitalist dilemma when, on page 110 of his book, he tells us that 
the basic cause of the crisis was excessive foreign lending, and 
that the cure is a resumption of foreign lending. 

1 1* Capitalism Doomed f (Harpere). 



74 THE COMING STRUGGLE FOR POWER 



We have now, perhaps, established the fact that the systematic 
and successful obstruction of the movement of both commodities 
and capital across national frontiers is one of the most striking 
characteristics of present-day capitalism. 

Many capitalist economists themselves point out this disas- 
trous tendency and, as we have said, they attribute it to the 
growth of nationalism. In Great Britain, in particular, where 
Liberalism, so long as it is impotent, is still a respectable opinion, 
this identification of nationalism as the villain of the piece is 
quite familiar. Liberal statesmen and economists, for the most 
part out of place and power, are often to be heard wailing dole- 
fully in this strain at public meetings in idle industrial centres. 
It is natural that it should be in Britain that these bemoaners of 
the Golden Age of free international competition are most vocal. 
For Britain, though no longer as she used once to be the inevit- 
able victor in such free competition, is yet the world's merchant 
and the world's carrier. Hence the plague of economic nation- 
alism which rages with ever-increasing violence through the 
world is least infectious for her. (For she suffers worst of all 
from the consequences of the disease in others.) Now at length, 
however, she is showing the well-known symptoms. She is en- 
gaged in reproducing the. protective systems of her neighbours ; 
and her Liberal economists have yet another reason for despair. 

These Liberal economists say that it is the spirit of nation- 
alism, and its economic consequences, which have prevented a 
re-establishment of the world market since the war, and have 
thus kept the world poor, divided, distracted, fear-ridden and 
on the edge of another war. For them, however, the plague of 
nationalism seems to have descended upon the world out of a 
blue sky. They see no reason, apparently, why the nations of 
the world should not be trading together at least as amicably 
as they did seventy years ago. Economic nationalism seems to 
them to be just one of the inexplicable manias of mankind. 
It cannot be analysed or accounted for in any way. And yet 
if the Liberal economists would examine the phenomenon a 
little more closely they would find a quite simple explanation 
of its sudden and alarming increase. Thus they would be 
spared the expenditure of a great deal of energy in resisting 



NATIONALISM IB 

a tendency which, if the cause cannot be removed, is quite 
irresistible. * 

-fWhat after all is the object of measures of economic nation- 
alism ? Demonstrably their object is to favour arbitrarily the in- 
terests of the property-owning citizens of one particular nation 
at the expense of the interests of the property-owners of some 
other nation. What is this, however, but to confer on the fav- 
oured property-owners some of the privileges of monopoly? 
And this in fact is what is done by tariffs, administrative pro- 
tection, politically selective capital exports, and the like. In 
other words, economic nationalism attempts to set up a special 
form of monopoly. Hence nationalism and monopoly are by no 
means unrelated characteristics of capitalism. 

This conclusion naturally leads us to enquire whether econo- 
mic nationalism is not the logical and inevitable consequence of 
the growth of monopoly within each state. After all, is it not 
natural that a progressive change in the character of each state, 
a change which gradually transforms their very natures, should 
change the relationship between different states ? Nor is it 
difficult to see exactly how and why the growing element of 
monopoly within the various national capitalisms has changed, 
and changed radically for the worse, the relationship between 
them. 

The growth of monopoly, not so much of any one particular 
monopoly ; the growth not of this or that trust, but the general 
weaving together of once competitive units of production, is 
changing the very nature of the modern state. The nineteenth- 
century conception o*f the capitalist state was that of an arena 
for the free competition of its citizens, or associations of citizens. 
Its functions were largely confined to the modest office of keep- 
ing the ring. It is clear that the external relationships of such a 
loose association of producers as the national states then were, 
could be comparatively peaceful and non-competitive. When the 
growth of international exchange brought, say, British pro- 
ducers, who were already in genuine and active competition 
with each other, into contact with French or American pro- 
ducers in the same line of business, all that any of them noticed 
was that the area both of their market and of competition had 
been widened. It made very little difference that some of their 



76 THE COMING STRUGGLE FOR POWER 

new competitors were located within the areas of sovereignty 
of other states. The activities of Governments were so limited 
that the nationality of a firm was hardly noticed. How very 
different is the position to-day. From being an arena for the 
competitive activities of its citizens, the state is becoming a 
federation, a sort of syndicate, representing the combined in- 
terests of its property-owning citizens. In particular, it is 
becoming the culminating organization of its federated entre- 
preneurs and financiers. The character of the external relations 
of these radically modified states is necessarily new .also. For 
example, far from the nationality of a firm encountered on the 
international market being an irrelevance, it has now become 
one of the most important facts about that firm. For it will 
imply that behind that particular firm, with its limited means 
of competition, will stand some State apparatus, with its vast 
resources. And the competitive power of the firm will depend to 
a considerable extent on the power of the state of which it is a 
constituent part. Instead of playing a negligible part in the 
economic life of the world, the capitalist states are now becom- 
ing more and more active. The common interests of their con- 
stituent economic organizations tend more and more to over- 
shadow the competition of these organizations. The associated 
entrepreneurs of to-day have long ceased to think of the State 
as a policeman set up by them to see that they all observe the 
rules of the game. They have come to regard the State apparatus 
as an essential expression of their joint wills, as one of the most 
important instruments by which their mutual prosperity may 
be enhanced. The State's economic activities, far from being 
dreaded by the capitalist class as they once were, are becoming 
a necessary and very welcome part of the general system. 
Tariffs, for example, and all the devices of " administrative pro- 
tection," appear as the natural support of the monopolies or 
virtual monopolies which have been nationally created ; since 
without tariffs the home market would be exposed to the pro- 
ducts of rival foreign firms in the same line of business, and the 
possibility of monopoly profits diminished. 

The attachment of political considerations to the export of 
capital is also inevitably associated with internal monopoly.^ 
If the heavy industries generally, and in particular those 



NATIONALISM 77 

branches of industry catering for large capital constructions of 
every type (iron and steel, heavy engineering, armaments, etc.), 
are highly organized and integrated, then the attachment of 
conditions to foreign loans will be strongly pressed. The condi- 
tion that a high proportion of the loan must be spent in the 
lending country may be explicitly exacted. More generally, 
however, it will be a vital interest to the federated firms of the 
heavy industries that " their " State should manage to get for 
them the right to undertake major schemes of capital develop- 
ment in newly opened up or backward countries. And this, of 
course, envisages that large and suitable portions of the un- 
developed globe should belong to their state. Thus, inevitably 
the struggle for the acquisition of colonies arises. The most 
obvious feature of imperialism begins to appear. For imperialism 
is nationalism on the offensive. It is the final and most ferocious 
form taken by the rivalry of the modern monopolistically 
organized states. 

^ It is now less difficult to understand the condition of acute 
international tension into which the world has fallen. The 
monopolistic tendencies of modern capitalism were bound to 
produce just those symptoms of relentless international rivalry 
which are to-day threatening the very existence of capitalist 
civilization. For, in a sense, it is true that the uncompromising 
nationalism of every great state is one of the factors which is 
making a revival of capitalism impossible. It is, in a sense, true 
that it is nationalism which makes insoluble every one of the 
capitalist world's economic problems : that it is nationalism 
which keeps the world permanently shivering on the brink of 
another and far greater war. All this, as we have seen, is recog- 
nized in even the Liberal diagnosis of the situation. But what 
makes these last Liberal voices so futile, and inrir 
is that they ignore the indissoluble cor 
whole inevitable drift to monopoly within \ 
fication of enmity between states. They 
if they wish to abate international riva 
world free market, they must first restoj 
tion within all the home markets. Until 
this, all the Liberal denunciations of natioi! 
are either humbug or nonsense. 




78 THE COMING STRUGGLE FOR POWER 

f 

A valuable analysis of the inevitability in modern conditions 
of these three stages in the self-destruction of capitalism, which 
we may call respectively economic nationalism, imperialism 
and war, has lately appeared from the pen of Mj^JR^G. Hawtrey, 
the economic expert of the British Treasury, whose words we 
have already had occasion to quote. 1 

We have seen that the growth of nationalism is based upon 
internal unification and monopoly. We have seen that modern 
capitalist states now consist of more or less unified groups of 
entrepreneurs and financiers. We must now consider the objects 
for which these groups compete with each other, the methods 
of their struggle, and its consequences. Let us follow Mr. Haw- 
trey's admirable study. 8 

Now it will be agreed that the group or category of citizens 
who predominantly influence their country's Government (that 
is to say the rich) always entertains the goal of further self- 
enrichment. Indeed, the rich have been taught that by seeking 
this goal untiringly, they will most benefit the community. But 
why should this in itself lead them on to a nationalistic and so 
warlike policy? War, it has been argued, by many Liberals, 
most notably by Sir Norman Angell, always impoverishes all 
the parties to it. Hence, it is the " great illusion," as Sir Norman 
Angell called it, of the capitalist class of each country to think 
that their interests are served by nationalism and militarism. 
In particular, Sir Norman AngelTs argument continues, the 
economic gains supposed to be derived from the annexation of 
new territory, are illusory. They are based upon a confusion 
between property and sovereignty. It is thought by the 
imperialists that by acquiring sovereignty over a portion of the 
globe, property rights a real enrichment are also gained. 
This is not so, and if only it were possible to induce the property- 
owning classes of the great powers to take a clear view of their 
own interests, they would cease to be military and imperialist. 

To this very popular argument, Mr. Hawtrey applies his 

1 It is true that Lenin and Bucharin had achieved a comprehensive analysis 
of these tendencies as early as 1916. We have, however, adopted the policy, in 
this section of the argument, of following up to their logical conclusions the 
hypotheses of the economists of capitalism. Hence we shall here attempt no more 
than a purely preliminary treatment of the whole vital question of imperialism. 
Lenin's conception of imperialism is discussed in Chapter XII. 

* Economic Aspects of Sovereignty (1929), 



NATIONALISM 79 

quiet and careful criticism. In the first place, he shows that 
sovereignty and property are more closely related than the 
Liberal pacifists admit. " Sovereignty is not property, but it 
carries with it important economic rights which are closely 
related to the rights of property." These rights of property which 
appertain to sovereignty also, are, he explains, of the nature of a 
landlord's interest in an estate which is about to be developed 
by entrepreneurs who acquire portions of it from him on lease. 
In the case of the annexation of new territory by a capitalist 
power, private entrepreneurs will apply for the right to acquire 
land, etc., from the imperialist Government which has annexed 
the territory. Now the mere right to invest capital in the provi- 
sion of the essential services of a new country in making the 
railways, sinking the mines, draining or irrigating the land, 
supplying electric power is in itself an extremely valuable 
thing. For the average rate of profit obtainable by investment 
in new or undeveloped countries will be certainly higher than 
the rate obtainable in a fully developed capitalist country such 
as that from which the entrepreneurs with their surplus funds 
will be sure to come. (No abstruse economics are needed in 
order to realize why this must be so. For, in a well-developed 
country, there will be, by definition, a good supply of capital 
equipment, and at the same time a large amount of new capital 
seeking investment. While in an undeveloped country there is, 
also by definition, a shortage of capital equipment and very 
little available new capital. Therefore the price of capital, which 
is simply its average rate of profit, will be high in the new 
country where the supply of it is short and the demand for it 
urgent, and low in the old country where the demand is less 
urgent and the supply more abundant.) 

Hence, people with money to invest are always looking for 
nice new countries, bare of railways, mines and power stations, 
etc., to invest it in. As we have seen, however, they must first 
get the consent of the Government which possesses sovereignty 
over the new country in question. Now this Government will 
have to choose which enterprising entrepreneur it will select as 
the " concessionaire " who is to build and afterwards own some 
railway or power station in its colony. On what principle do 
Governments in fact proceed in the granting of these valuable 



80 THE COMING STRUGGLE FOR POWER 

concessions ? Mr. Hawtrey, who after sitting for many years in 
Treasury Chambers, Whitehall, London, has seen a good many 
of them given, tells us quite clearly. 

* 4 The principles," he writes on page 28, " on which appli- 
cants are favoured may never be publicly formulated at all. 
It may be a matter of tacit understandings. But the tendency 
almost invariably is to follow a nationalist policy. The Govern- 
ment favours applicants from among its own people, and lays 
its plans to suit their interests. 

" This nationalist policy has far-reaching effects, in that it 
makes sovereignty over new or undeveloped countries an 
object of cupidity. The profit seekers are usually in a position 
to exercise influence over their own Governments, and Govern- 
ments regard the support of their profit seekers' activities in 
every part of the world as a highly important aim of public 
policy." 

Hence, it is by no means an illusion that the annexation of 
territory by a great power enriches the individual capitalists 
who control the Government of that power. 

" What I have said," Mr. Hawtrey continues, " as to the need 
of the profit-making exploiter to obtain rights and concessions 
from the sovereign authority would not in itself weaken 
Norman AngelTs argument. In most people's eyes it would 
strengthen it. If the sovereign power is to be used, not to 
promote the interests of the community in general, but to line 
the pockets of a limited number of people, who will have been 
very rich to start with, that in itself seems to be an abuse. 
If the State is to be involved in disputes arising out of the 
rival ambitions of different sets of exploiters, and such dis- 
putes are to lead on to war, surely nothing more than a public 
exposure is required for all those concerned in such events 
to be treated as criminals and enemies of the human race. 

" But is not the fault in the system ? If I may criticize 
Norman Angell, it will be for arguing that the system does 
not involve these consequences." 

That is the whole point. What Mr. Hawtrey calls "the 
system " that is, the present-day imperialist or monopolistic 



NATIONALISM 81 

phase of the capitalist system does and must involve predatory 
adventures upon the part of the Governments of the great 
powers, in order to acquire territories in which their capitalists 
may invest. The rest of Mr. Hawtrey's argument is devoted 
to showing, with faultless lucidity, that these inevitable 
imperialistic adventures must in theory, and do in practice, 
involve the great powers in war. If, he says, " welfare," the* 
economic well-being of its citizens, that is, were the main object 
of the public policy of the great states, war between them would 
not be inevitable. Power, however, and not welfare is the real 
object of their policy. 

" We are accustomed to think of economic ends in terms 
of welfare, but in matters of public policy that is never the 
whole story. To each country power appears as the indispens- 
able means to every end. It comes to be exalted into an end 
itself. 

u So long as welfare is the end, different communities may 
co-operate happily together. Jealousy there may be, and 
disputes as to how the material means of welfare should be 
shared. But there is no inherent divergence of aim in the 
pursuit of welfare. Power, on the other hand, is relative. The 
gain of one country is necessarily loss to others ; its loss is 
gain to them. Conflict is of the essence of the pursuit of power .$ 

" If it has constantly been an aim of public policy to use the 
authority of the State to favour the activities of those who 
undertake economic development, even to the extent of 
acquiring undeveloped territory as a field for their activities, 
and possibly risking war in the process, that is because this 
policy has been believed to further the power of the State." 

And the pursuit of power must, we are further shown with 
impeccable logic, sooner or later involve the Governments of 
the great states in war. For, as Mr. Hawtrey points out, there 
is no other conceivable method by which in the last resort this 
competition for power can be decided. 

** If war is an interruption between two periods of peace, 
it is equally true that peace is an interval between two wars. 
That is not a mere verbal epigram. It is significant in a very 
FP 



2 THE COMING STRUGGLE FOR POWER 

real sense. War means the imposition of the will of the stronger 
on the weaker by force. But if their relative strength is already 
known, a trial of strength is unnecessary ; the weaker will 
yield to the stronger without going through the torments of 
conflict to arrive at a conclusion foreknown from the begin- 
ning. The reputation for strength is what we call prestige. 
A country gains prestige from the possession of economic 
and military power. These are matters partly of fact and 
partly of opinion. Were they exactly ascertainable and 
measurable, conflicts of prestige could always take the place 
of conflicts of force. But it is not possible to measure exactly 
either the wealth of a country or the degree of its mobility, 
and even if the military force that could be maintained were 
precisely known, there are imponderables to take account of, 
the military qualities of the men, the proficiency of the leaders, 
the efficiency of the administration, and, last, but not least, 
pure luck. Prestige is not entirely a matter of calculation, but 
partly of indirect inference. In a diplomatic conflict the 
country which yields is likely to suffer in prestige, because 
the fact of yielding is taken by the rest of the world to be 
evidence of conscious weakness. The visible components of 
power do not tell the whole story, and no one can judge 
better of the invisible components than the authorities govern- 
ing the country itself. If they show want of confidence, people 
infer that there is some hidden source of weakness. 

** If the country's prestige is thus diminished, it is weakened 
in any future diplomatic conflict. And if a diplomatic conflict 
is about anything substantial, the failure is likely to mean a 
diminution of material strength. 

" A decline of prestige is therefore an injury to be dreaded. 
But in the last resort prestige means reputation for strength 
in war, and doubts on the subject can only be set at rest by 
/war itself. A country will fight when it believes that its prestige 
in diplomacy is not equivalent to its real strength. Trial by 
battle is an exceptional incident, but the conflict of national 
force is continuous. That is inherent in the international 
anarchy," 

Nor can preparations for this inevitable conflict be avoided. 



NATIONALISM 88 



" An end which can at one time be thus paramount Cannot 
be disregarded altogether at other times. Wai* is an industry, 
and, like other industries involving the use of plant and 
capital equipment, it requires an interval of time between 
the beginning of the productive process and its culmination 
in the delivery of the completed product. The completed 
product is organized force. Time in war is precious and *nay 
be decisive. Delay in making force effective may mean irre- 
parable disaster at the outset. Any deficiency in the prior 
preparations may mean some shortcoming in the field of 
battle which cannot be made good in time. 

" Even if war were a visitation comparable to an outbreak 
of fire, and disconnected with the events preceding it, this 
question of preparation could not be neglected. The cost of 
armaments in peace-time is often compared to a premium 
of insurance against fire. The comparison would be more con- 
vincing if it did not imply that the fire insurance companies 
are the principal incendiaries." 

We perceive that there is a perfect chain of logic between the 
existence of what Mr. Hawtrey calls " the system '' that is, 
capitalism in its present imperialist phase and the present 
condition of the capitalist world, heavy with armaments, and 
racked by the foreboding of its own doom in a new war. 

Capitalism, we see, is coming more and more to mean mono- 
poly at home and ferocious competition abroad. The acquisition 
of territory in order to acquire monopoly rights of exploitation 
is a major object of the competing national groups of entre- 
preneurs. The object of the individual entrepreneurs may be the 
apparently harmless one of enriching themselves. They know, 
however, and their knowledge is no illusion, that the acquisition 
of power through the use, or the menace, of the armed forces of 
their state is to-day an essential prerequisite to the acquisition 
of wealth. Hence, the organized force alone possessed by the 
Governments of the great powers is of necessity pressed into 
their service. Were any such national group of capitalist entre- 
preneurs to deprive themselves, on Sir Norman Angell's advice, 
of this armed force they would quickly be excluded from all 



84 THE COMING STRUGGLE FOR POWER 

opportunities for really profitable investment by other groups 
of entrepreneurs who had not been so quixotic. Once this had 
happened, their helplessness would be apparent and what 
meagre revenues they, and the wide sections of the population 
of their nation who had become dependent on them, retained 
would be on sufferance from the entrepreneurs of some still war- 
like power. Hence, they and their states are inevitably involved 
in a perpetual struggle for power. In peace-time, this struggle is 
conducted by menace as by the display of force in great arma- 
ments. Every now and then, however, the need must arise to 
make good the menace, by the actual use, of force. And too 
great an apparent reluctance to use force will always be taken 
as a lack of confidence that the force is really there to use. 

T Liberal pacifists should read, and then re-read, Mr. Hawtrey's 
bbok. 

There exists, however, another school of thought which takes 
an optimistic view of the prospects of world peace under capi- 
talism. This school starts with a very great advantage over the 
Liberal pacifists, in that its adherents have at any rate realized 
the intimate connection between the monopolistic tendencies 
within, and the political relations between, capitalist states. 
They take the view that, while admittedly the prospects of war 
are greatly increased by the formation of national monopolies, 
and that these prospects have been in fact increased in so far as 
this tendency has existed, yet the consequential imperialist and 
nationalist phase of capitalism is a passing one. And, pointing 
to the existence of international monopolies, they look forward 
to Combination instead of Competition amongst the great 
powers themselves. Imperialist adventure and war, they agree, 
are nothing but capitalist competition on an international scale. 
In the same sense, a world federation of the great powers, of 
which the League of Nations is the beginning, will be the political 
expression of capitalist combination on a world scale. This 
theory which, like most theories, has been most fully elaborated 
in Germany, looks forward to a time beyond the present imperi- 
alist phase, when " ultra-imperialism," as it is called, shall have 
brought the peace of mighty united international trusts to the 

i whole earth. This point of view is certainly ahead of Liberal 
pacifism in that it does suggest some material basis for its 



NATIONALISM ss 

optimistic forecasts of a pacific capitalism. Its adherents do not, 
like the Liberal pacifists, simply suppose that the attainment of 
peace is a matter of a sufficient number of speeches at public 
meetings. 

No one indeed denies that there are signs of international as 
well as national combination in the world to-day. There is per- 
haps only one well-developed world trust Kreuger and Toll's, 
the Swedish match monopoly. 1 There exist, however, numerous 
cartels and working agreements as to price between big pro- 
ducers of the same commodity in different nations (e.g. the 
European Steel Cartel). The question at issue boils down to a 
purely factual and quantitative one. If the tendency to inter- 
national monopoly is running more strongly than the tendency 
for monopolies to cluster and cling round the national State 
organizations, then certainly it is possible to look forward to a 
growth of pacifist sentiment, and even practice, in the govern- 
ing classes of the world. This question, however, has only to be 
raised for the answer to become obvious. No one can possibly 
doubt that to-day the predominant tendency runs strongly the 
other way. The international organizations are comparatively 
few, and are most unstable. They are apt to break up, under 
patriotic pressure, for instance, especially during slumps. (A good 
example of the national resistance to international participation 
in share capital is afforded by the rules which the British Gen- 
eral Electric Company has adopted in order to prevent control 
passing into American hands. Again, the employment of even 
those liquid funds awaiting investment, which are to-day 
gathered in the three financial centres of New York, Paris 
and London, is becoming more and more determined by 

l The first draft of this chapter was written before the suicide of M. Ivar 
Kreuger, the collapse of his organization, and the discovery that the whole trust 
had been a gigantic fraud from its inception. No more striking confirmation how- 
ever of the view that international trusts are inherently unstable could have 
occurred. In December 1931 Mr. T. G. Barman, writing in the Fortnightly Review 
could found a whole political philosophy upon the beneficial activities of Messrs. 
Kreuger and Toll. These activities were to inaugurate here and now, and without 
the slightest inconvenience to anyone, the era of pacific ultra-imperialism. 
Again, Sir Arthur Safter had the misfortune to publish his book on world recovery 
just before Mr. Kreuger's demise. In it he deplores the fact that " good construc- 
tive loans, like those arranged by a man of such creative vision as Mr. Ivar 
Kreuger, are threatened with the bad." No one will deny that " creative " was 
the mot juste. For it now transpires that Mr. Kreuger had been, ever since 1925, 
creating Italian Government bonds by the simple and direct method of printing 
them. 



86 THE COMING STRUGGLE FOR POWER 

nationalistic considerations. Thus French balances in London 
are regularly used by the French Government to influence British 
policy.) 

The best answer to the theorists of ultra-imperialism is not to 
be found, however, in any detailed enquiry into the actual 
number and importance of national as opposed to international 
trusts. For the connection between the rate of growth of the two 
forms of economic monopoly and the possibilities of peace or 
war under capitalism is not in dispute. The ultra-imperialists 
admit that peaceful developments are only to be expected in so 
far as monopoly becomes international and that warlike symp- 
toms must follow the growth of national monopolies. Hence, an 
agreed test of which economic tendency has in fact predomin- 
ated can be found by estimating whether signs of international 
co-operation or of international rivalry are growing in the world 
to-day. And who in their senses can doubt the answer to that 
question ? (We might in order to weigh the two tendencies put 
the Japanese Manchurian adventure of 1 932 into one scale and 
the Disarmament Conference of the same year into the other.) 
Hostility between the great powers is growing almost month by 
month. If the present (1932) world slump is surmounted, it will 
only be after the wholesale adoption of measures of economic 
nationalism. Tariffs, administrative protection, quotas, export 
bounties every conceivable form of interference with economic 
internationalism, is growing at an unparalleled rate. Great 
Britain has become a protectionist country. Desperate efforts 
are being made to isolate the British Empire from the current of 
world trade. And these efforts are themselves being thwarted 
by acute national rivalries within the Empire. A frenzy of 
nationalism has seized the United States Congress. The states 
of Eastern and Central Europe are starving in the midst of the 
bitterest internecine hostility. France and Germany are still in 
irreconcilable dispute. International lending is almost at an end. 
Does this look like the laying of the economic foundations of an 
ultra-imperialist, peaceful, phase of capitalism ? It does not. 

The truth about this possibility of a peaceful world trustifica- 
tion of capitalism, a " golden international " which shall both 
; end war and preserve capitalism for ever, is that it is a theo 
retical possibility, and nothing more. There is nothing in pure 



NATIONALISM 87 

theory which makes it inconceivable. It is not out of the ques- 
tion in the same way that the Liberal dream of a peaceful world, 
combined with the present nationally monopolistic organiza- 
tion of capitalism, is out of the question. On the other hand, the 
evidence of what is actually happening in the world proves that 
things are going in precisely the opposite direction. We may be 
told that this is merely " a phase " that sooner or later the 
world will be quite peacefully and nicely " trust up." Yet, even 
if this extremely far-fetched proposition be admitted, we may 
be sure of one thing at least. Even if we admit that capitalism 
is on the way to world monopoly and so to peace, yet the whole 
condition of the world assures us that the road it has taken 
does not lead through gentle mergings of trusts and scientific 
federations of nations. On the contrary, if it leads to the peace 
of world monopoly at all, it does so by a series of the most 
gigantic and devastating wars between the great monopolist 
groups, and the nations which they own. It leads only to a 
desert peace, established by some victor empire after the last 
supreme war of the world. Thus, and thus alone, could capitalist 
peace be established upon the earth. 



CHAPTER V 
Unstable Money 

THE third of the four marked characteristics of present-day 
capitalism which we are examining in turn, is unstable money. 
Now the most important conclusion of the last two chapters 
was that the two capitalist characteristics discussed, viz. 
monopoly and nationalism, were closely interrelated. Our con- 
clusion as to the instability of money, however, will be that, on 
the admission of the leading capitalist economists themselves, 
unstable money is purely a symptom, and not a cause of the 
present difficulties of the capitalist system. 

It is necessary, however, to examine the question of mone- 
tary instability and to demonstrate that its symptomatic char- 
acter is now admitted by all serious students of the subject. 
For there exists a whole school of thought which clings to the 
comforting illusion that one particular difficulty of capitalism 
at least, namely, the recurrence of crises, can be eliminated by 
what is called " monetary reform." The members of this school 
of thought call attention to the fact that the chief symptom of 
these recurrent crises is a simultaneous fall in prices. They 
attribute this symptom to a defective working of money. And 
they propose various measures by which money can be reformed 
so that it can becdme " stable " : so that all prices, that is, shall 
never simultaneously rise or fall. Were this view well founded, 
the possibility of the continuance of the capitalist system the 
question to which the whole first half of this book is devoted 
would be profoundly affected. Hence it is necessary to dispose 
of it conclusively. 

Now, for a writer of the year 1982 to describe the character- 
istics of a commercial crisis, and its appalling consequences upon 
the prevailing economic system, would be, for his contempor- 
aries, a superfluous task. For the whole capitalist world is, as he 
writes, still plunged into one of the more violent and disastrous 
of such crises. The general price-level of staple wholesale 
commodities has fallen 42 points, from 100 in 1927 to 58 in 
July, 1982. Thi$ catastrophic fall in the prices of things and 
equally catastrophic rise in the price of money, is a symptom 



UNSTABLE MONEY 89 

of human frustration, suffering, privation, actual starvation, and 
death, on a scale unparalleled in any previous crisis. 

The one overwhelming characteristic of such a crisis in 
capitalism is waste. To-day waste, on a scale unparalleled in the 
history of the world, is the dominating fact of life. The most 
striking and visible form of this waste is perhaps the waste of 
human beings what we call unemployment. This wastage, the 
enforced physical deterioration, that is, of millions of human 
beings, goes on before our eyes. According to the League of 
Nations, there are about thirty million unemployed men and 
women in the world to-day, whose mental and physical powers 
are slowly being wasted by the denial of the opportunity for 
their exercise, and by their consequent inability to provide 
themselves and their dependants with the necessaries of life. 
But the immeasurable waste of a great crisis is not confined 
to human beings. On the contrary, at the same time as these 
millions lack most of the necessaries of life, all over the world 
to-day vast stocks of commodities, redundant harvests, rotting 
goods, rusting machines are gradually deteriorating into 
uselessness. 

Moreover, waste is now being consciously and systematically 
organized. For example, during 1931, the American Board of 
Agriculture advised American cotton growers to " plough in " 
every third row of their cotton crops. This advice did not, how- 
ever, succeed in sufficiently reducing the crop. Accordingly, it 
is now suggested that the great cotton pest, the boll-weevil, 
should be protected preserved like partridges in England so 
that some part of the unsaleable crops at any rate should be 
destroyed. Similarly, it has been suggested that suitable pests 
should be introduced into the rubber plantations. Again, the 
Brazilian Government, which has been systematically burning 
coifee for some time, is now said to be about to adopt a plan by 
which the coffee grains can be used as fuel for its locomotives. 
Examples of such carefully and ingeniously organized waste 
could easily be multiplied. 

And yet all but a comparatively small proportion of the 
world's population still exists miserably without a sufficiency of 
even bare necessaries. For example, the London Times of 
April 4th, 1982, tells us that : 



90 THE COMING STRUGGLE FOR POWER 

*' 

" Telegrams received in London in the last few days from 
Sir John Hope-Simpson, in China, report that cholera has 
broken out in a camp of 104,000 refugees near Hankow, and 
that over 80% of the cases have proved fatal. Funds are not 
available to provide a hospital or medical relief. In North 
Anhwei food supplies are exhausted, and nothing is left to 
sell except children, who are sold at the rate of six Chinese 
dollars (9s.) for a boy and ten Chinese dollars for a girl^All 
dogs have been eaten." 

On June 8th, 1932, the Tokyo correspondent of the same news- 
paper writes as follows : 

44 Painful details of rural destitution are extracted by the 
vernacular newspapers from preliminary reports of officials 
sent by the Ministry of Agriculture to investigate four rural 
prefectures. 

44 They state that many villages are almost moneyless, that 
petty trades are done by barter, and that people are eating the 
roughest grains and bracken roots, even beancake being 
cooked. The police cannot control thefts of food, and incen- 
diarism for insurance is said to be rife. Worst of all, girls are 
being virtually sold." 

Nor is such overwhelming poverty a mere legacy from the epochs 
of real scarcity. Nor is it confined to India, China, and the 
regions of the world in which modern productive methods have 
not yet been systematically applied. On the contrary, at this 
moment when in Western Europe and America men are striving 
desperately to destroy the products of their marvellous machines, 
and to nullify the embarrassing fertility of nature, mankind in 
general is becoming progressively poorer month by month. 1 
Even in the regions of a comparatively high standard of life 
such as Europe, the symptoms of mass starvation are beginning 
to appear. Thus the Committee of Inquiry, set up by the clergy 

1 " Never was nature so generous in her gifts : never was man so equipped in 
skill and scientific resources to utilize them. Ours is a problem of the impoverish- 
ment which comes with plenty." Sir Arthur Salter in Recovery. 



UNSTABLE MONEY , 91 

of Newcastle in Great Britain, reported that " what was really 
most needed was food. Mothers were suffering from under- 
nourishment." In March 1982, the London Times reported that 
the inhabitants of the considerable Austrian town of Steyr have 
now killed all their dogs for food, while in Buda Pest one whole 
area of the city consists of shelters half dug out of the ground. 
In the Czecho-Slovakian province of Ruthenia, a skilled 
observer, Mr. Gerald Hamilton, reports that : 

" I have seen famine in India and China, and was in Ger- 
many during the starvation blockade of 1918. Never have 
I seen hunger and want so appalling. Rescue service has com- 
pletely broken down. The children are so undersized through 
lack of nourishment that six-year-olds present the appear- 
ance of babies." Daily Express, March llth, 1932. 

At the same time, obsolete pre-industrial economic methods 
begin to reappear since the new technique is being deliberately 
destroyed. Hungary, the London Times also informs us, has 
already almost abandoned motor transport and returned to the 
horse. Great areas of Central and Eastern Europe are returning 
to darkness and primitive destitution. 

Thus the capitalist world presents us with an astonishing 
spectacle. The perfection of its technique of production is only 
matched by its inability to produce. The abundance and super- 
abundance of everything which men need, is only matched by the 
destitution of nearly all mankind. 

Few will, perhaps, deny that the cause of a phenomenon 
which can, and not for the first time, produce such effects is 
worth looking for. It is, therefore, essential that we should arrive 
at an understanding of the nature of capitalist crises and so form 
our conclusions on the question of whether there is any possi- 
bility of their elimination from the system. Let us deal with the 
arguments of those who suppose that monetary reform pro- 
vides a solution. Let us first examine the nature of money. 

The true nature of the money which is used by the great 
powers to-day is a matter of dispute amongst capitalist econo- 
mists. The historical origins of money, on the other hand, and 



92 TE COMING STRUGGLE FOR POWER 

the nature of nearly all money until recent times, is not open to 
question. Money originated out of barter. Every text-book on 
economies describes to us the obvious inconveniences of barter. 
Thus, in a barter economy, if you had more boots than you 
needed and not enough bread, you had to find a barefooted 
baker, or go hungry. But once money has come into existence, 
you can sell your boots to anyone, and with the money he gives 
you, buy your bread from any baker no matter whether the 
baker wants boots or a ticket to a circus. Money, in a word, 
enables you to split an exchange into two halves, buying and 
selling, and to effect the two halves of the exchange with dif- 
ferent people at different times. 

Thus the need for money is obvious. But when and how in fact 
did mankind become possessed of this remarkable contrivance ? 
The answer is that we do not know when money appeared : it 
appeared before recorded history begins, at any rate. But we do 
know, from the evidence of all recorded and surviving primitive 
communities, how money originated. Man first made money by 
putting aside one particular commodity and agreeing that this 
commodity should be the " general equivalent " of all other 
commodities. That is to say, it was agreed that this particular 
commodity usually at first the most important commodity 
used in the daily life of the community should always be ac- 
cepted by everybody in exchange for anything else. Let us 
straight away call this specially selected commodity gold, (Not 
that gold is ever in fact the commodity first selected to serve as 
money. Cattle, shells, goats, tobacco, cotton, rice, iron, copper, 
silver and all sorts of things have been and still are used by men 
for this purpose.) 

The predominant money commodity is now, however, gold* 
So let us say, for simplicity, that gold is chosen right away. At 
once a new question arises. We have said that everybody has 
agreed to give and to take gold in exchange for anything eke. 
But how much gold ? How much gold will your customer give 
you for your boots ? How much gold must you give the baker 
for his bread ? 

We see that with the emergence of gold as the general equiva- 
lent in exchange, the price of everything must be reckoned in 
ounces of gold. Gold becomes the standard of the price of 



UNSTABLE MONEY 4 98 

fish, of bread, of tickets to circuses, and, for that matter, ad 
we had occasion to observe in Chapter I, of tickets to heaven 
too. 1 

Thus bread is exchanged for fish, fish for clothes, clothes for 
fuel, fuel for shelter and so on and so on, but all by means of 
gold. That is to say, by each commodity actually being ex- 
changed in the first instance for gold, and in the second in- 
stance, by their comparative prices all being reckoned in 
quantities of gold. 

Thus gold has become money and certain quantities of it 
viz. so many ounces, or fractions of an ounce, of gold have 
become the units of money. For coinage and coins have really 
nothing to do with the matter. Pounds sterling, shillings and 
pence, are simply names that have been given to so many 
ounces, or fractions of an ounce, of gold. 

This is how money originated. And this original kind of 
money is most conveniently called " commodity money." For 

1 Gold f Yellow, glittering, precious gold / . . . 
Thus much of this will make black, white ; foul, fair ; 
Wrong, right ; base, noble ; old, young ; coward, valiant ; 
. . . What this, you gods ? Why, this 
Will lug your priests and servants from your sides, 
Pluck stout men's pillows from below their heads. 
This yellow slave 

Witt knit and break religions ; bless the accursed ; 
Make the hoar leprosy ador'd ; place thieves, 
And give them title, knee, and approbation, 
With senators on the bench ; this is it, 
That makes the wappen'd widow wed again. . . . 

It is difficult not to believe that this is one of the passages which Shakespeare 
wrote into the MS. of Timon of Athens. Marx quotes it in Capital. Incidentally it 
is not usually observed that Marx was a keen Shakespearean. The first 150 pages 
of Capital have four Shakespearean quotations alone. Shakespeare, himself, who 
stood just at the watershed between feudal and modern life, had the keenest 
possible sense of the fatal and overmastering power of economic necessity, both 
for the individual and for the community. A whole sequence of the sonnets is 
after all nothing more than an echo of Hamlet's answer to the question of why 
he was melancholy : " Why, sir, I lack advancement. . . ." Mr. Keynes, however, 
points out that Shakespeare was in the end able to achieve " advancement " and 
died rich. As Mr. Keynes says, he could hardly help doing so, since he lived at a 
time when immense profits were being reaped by the Elizabethan governing class 
at the expense of the workers and peasants by means of rapidly rising prices. 
Mr. Keynes goes on to swallow whole in one footnote the materialist conception 
of history, stated in rather an extreme form. He makes the suggestion that " by 
far the larger proportion of the world's greatest writers and artists have flourished 
in the atmosphere of buoyancy, exhilaration and the freedom from economic 
cares felt by the governing class, which is engendered by profit inflations " (A 
Treatise on Money, Vol. II, p. 154). It would almost seem that Mr. Keynes believes 
that ** profits do make poets of us all," Marx never went as far as that* 



94 THE COMING STRUGGLE FOR POWER 

% 

that name makes it clear that money is simply a commodity 
like any other but a commodity which has been, as it were, 
seconded for special duties. The chief of these duties are, first, 
to serve as a means of exchanging all other commodities ; and, 
second, to serve as a substance which can be infinitely sub- 
divided into quantities, so that the price of everything can be 
reckoned by comparing it to a particular quantity of the money 
commodity. 

Whether or not this primal type of money, commodity money, 
is still the only actual type in use is another matter of dispute 
between capitalist economists. (As a matter of fact, as we shall 
show, there is not the slightest doubt that money is and always 
must be, so long as capitalism endures, a commodity.) 

Let us, for example, consider for a moment the view of the 
nature of money taken by the most optimistic of all capitalist 
theorists, Mr. J. M. Keynes. The text \vhich immediately follows 
is a summary, and so necessarily a rough and ready, account of 
his view of the functions of money and the possibilities of 
monetary reform as exposed in the early chapters of his two 
volumes entitled A Treatise on Money. If we come, by following 
this guide, to any conclusions unfavourable to the possibilities 
of monetary reform, we shall know that if we had instanced the 
work of other capitalist economists, such as Dr. Hayek or Mr. 
D. H. Robertson, we should inevitably have come to conclusions 
still more unfavourable. 

Mr. Keynes' view is selected for discussion, not because it is 
necessarily the soundest, but just because it does hold out the 
maximum possible hope of capitalist revival by way of mone- 
tary reform. Meanwhile, some attempt will be made in the foot- 
notes to keep an eye on the views, at least of Dr. Hayek who 
represents a school of monetary thought which is particularly 
interesting for our purposes. These footnotes, since reasons of 
space forbid an exposition of another monetary theory, will 
inevitably assume a much greater familiarity with the subject 
than does the main text. Perhaps those readers, who do not 
happen to have made a special study of a subject which Mr. 
D. H. Robertson calls " a field of appalling intellectual diffi- 
culty " will not take offence if it is suggested that the footnotes 
in this and the following chapter can, if the reader prefers it, be 



UNSTABLE MONEY 95 

t 

neglected altogether without breaking the continuity of the 
argument. 

Mr. Keynes considers that there exist to-day no less than 
four kinds of money. He calls them Commodity money ; Fiat 
money ; Managed money ; and Bank money. 

Let us take these kinds of money, one by one. Commodity 
money we have already considered. Fiat money is what people 
usually call " inconvertible paper money." 

Managed money is also paper money, but it is a paper money 
which the authorities undertake to manage in such a way as to 
maintain its value at a constant level in terms of some com* 
modity. For instance, Great Britain had Managed money be- 
tween 1925 and 1931. Her citizens used paper notes, but the 
value of each pound note was kept equal to a given weight of 
gold. This was ensured by giving everyone the right to convert 
one of these notes into this weight of gold. In order to be able to 
do this, the State has to refrain from issuing too much of this 
money. 

Now it will be observed that these last two kinds of money, 
Fiat money and Managed money, are both issued by the State. 
Therefore they may both be classified as kinds of State money. 

Lastly, Mr. Keynes distinguishes Bank money. Bank money is 
in one sense another kind of money altogether. It is a kind of 
money, moreover, which performs only one of the two essential 
functions of money which we defined above. It acts perfectly as 
a medium of exchange. But it cannot possibly be a standard of 
price. Bank money is a kind of private, irregular money, which 
has grown up behind the back of the State. For it is the State, as 
we have seen, which creates Fiat and Managed money, and even, 
when it coins it, recognizes Commodity money with the official 
stamp of its blessing at the mint. Private Bank money, how- 
ever, is a very old institution : it dates from the time when men 
discovered that the acknowledgement of a good and reliable debt 
was just as good a thing to own as the amount of the debt 
itself. Bank money is, in fact, simply a gigantic system of I.O.U.s 
which are passed about from hand to hand by means of cheques 
and " bills." For example : A wants to buy a dog from B for 10. 
Instead of giving B ten one-pound notes, A writes a bill, or 
letter, to his banker, who keeps A's money for him, telling him to 



06 THE COMING STRUGGLE FOR POWER 

pay B ten one-pound notes at any time that B likes to call. But 
B, as it happens, is buying a table from C, also for 10. So 
instead of taking the trouble to go to A's bank and get the notes, 
he writes a sort of postcript to A's letter to his banker (endorses 
A's " bill," as we say), telling the banker to pay the notes to C 
instead of to himself. C, however, wants to buy something from 
D, and again passes A's acknowledgement of a debt of 10 for 
that is what a " bill " is on to D : and so on and so on without 
anyone ever troubling to go to A's bank and get the notes. Thus 
we see that these acknowledgements of debts can circulate on and 
on exactly as if they were money. And in fact it is calculated 
that about nine-tenths of the money which we use to-day is this 
kind of " Bank money." 

Observe, however, two important limitations which attach to 
Bank money. In the first place, the whole system depends on 
everybody's confidence in everybody else. Unless B believes that 
A really has got the ten one-pound notes in a bank, the ac- 
knowledgement of the debt, however precise, is valueless. For 
in that case it would be A who had sold B a pup. Hence, Bank 
money depends on the exchangers having confidence in each 
other's stability and integrity. In the second place, Bank money, 
the acknowledgement of debts, cannot itself be the standard of 
price. The amount of the debt must be reckoned in terms of 
something other than itself. It is, of course, reckoned in money, 
that is, in units of one or other of the particular kinds of money 
which are in use in the community. You cannot, in other words, 
pay a man in " bills " or " cheques." You pay him in a cheque 
of, say, 10. There must always be some monetary units to 
write on the face of the cheque. 

These then are Mr. Keynes' four existing types of money. Is 
it not already clear, however, that the last three types Fiat, 
Managed, and Bank money are, in fact, a mere superstructure 
built on the essential and original type, Commoditjf money. 
And is it not clear that they cannot exist without Commodity 
money as their foundation ? 

For we have seen that Bank money, in spite of the undoubted 
fact that it is the predominant form of money current to-day, 
cannot, on Mr. Keynes 9 own showing, be the only or exclusive 
money of the community. Some other form of money must 



" f !" 

UNSTABLE MONEY 97 

underlie it. Now Managed money is clearly derivative from 
Commodity money. It is not identical with it, but it cannot exist 
unless Commodity money exists too, unless, that is, there still 
exists some commodity (or, as will appear, commodities) which 
has been picked out as the general equivalent. For, as we saw, 
it is of the essence of Managed money that it is managed with 
reference to the value of some commodity. And this is shown by 
another name which can be given to Managed money. For Man- 
aged money is a particular type of " Representative money." 
It is, that is to say, money which consists of something (say, 
paper) which is made to represent another thing (say, gold). 
Hence, it is clear that a Representative money cannot exist 
without something to represent. As to Fiat money, Mr. Keynes 
himself admits that it cannot exist for long without breaking 
down. That is to say, the mere decree, the arbitrary " say so " 
of the State, cannot for ever, or universally, make pieces of 
paper which have no fixed quantitative relation to any com- 
modity, carry out the functions of money. Sooner or later such 
Fiat money, for the value of which there will be no criterion, 
which may rapidly become more or less valuable to any extent, 
will cease to perform the functions of money. For people will no 
longer accept it in exchange for anything else. They will not 
reckon the value of everything else in terms of its units. It will 
cease to be money. 

Therefore, it is surely impossible to deny that Mr. Keynes' 
own train of argument leads to the conclusion that the original 
form of money Commodity money is the only form. All the 
rest are superstructures upon the top of it. For it is agreed that 
Fiat money will only function so long as there lasts, what we 
may call, the momentum of goodwill of the Commodity money 
which it has succeeded. As for Managed money and Bank 
money, they are merely ingenious and important extensions of 
Commodity money : extensions, however, which cannot possibly 
exist without their base. Hence, in one form or another, Com- 
modity money is the essential basis of all money. And yet Mr. 
Keynes says that the era of Commodity money is finally over. 
Surely he is guilty of a quibble ? For he tells us that our modern 
money is " Representative money." Agreed, but representative 
of what ? Obviously of some commodity. No one, of course, is 
GP 



98 * THE COMING Sl&UGGLE FOR POWER 

suggesting that we use direct Commodity money to-day, in the 
sense that given weights of the chosen commodity circulate 
amongst us. But is it not obvious that Representative money 
betrays by its very name that it is only Commodity money at 
one remove ? 

Now, if money is a commodity, the particular commodity 
which has been selected to be money has a price like any other 
commodity. And that price will be immediately determined by 
the supply of it and the demand for it. Therefore its price can, 
and will, fluctuate. Gold, as we have seen, is to-day the com- 
*modity chosen by the most important countries of the world 
to be their money commodity. And the price of gold can and 
does fluctuate widely. But what does this mean ? What effect 
does it have on the mechanism of the market when gold the 
commodity chosen to be the general equivalent of all other com- 
modities when money itself, fluctuates in price ? Before answer- 
ing that question, let us at once define this paradoxical concep- 
tion " the price of money." I use it throughout this chapter to 
mean the exact converse of the phrase " the general price- 
le^el." The way in which to think of the " price of money " is 
to read a price-list from right to left instead of from left to right. 
Then we realize that it is just as true to say that you can buy 
a certain amount of money with a certain amount of goods, as 
vice versa. All that is necessary is to think of goods buying money 
instead of money buying goods. For a change in the price of 
money is the same thing as a simultaneous, and opposite, change 
in the price of everything else. For money, as we have seen, is 
amongst other things the measuring-rod of the economic world. 
And if the measuring-rod grows longer in the night, everything 
else is reckoned to be shorter next morning. 

Now the inconveniences and distresses of changes in the price 
of money are all too well known to the modern world. We need 
not labour them here. Suffice it to say that in principle it is clear 
that if money itself is, for example, going up in price, then 
obviously the process of exchange will be slowed down. For 
when a man has only completed half of an exchange, when he 
has sold but not bought, he has money in his hands. But if that 
money is going up in price, he will hold on to it and not buy 
until he can get more commodities for his money than he would 



UNSTABLE MONEY 99 

have previously. 1 Conversely, if the price of money is going 
down, he will hurry to buy and the process of exchange will be 
speeded up unless indeed its price is falling so catastrophically 
that the other man, with whom he is exchanging, is holding on 
to his goods, since they are now rapidly increasing in price. 8 
Thus, in either case, unstable money ceases adequately to per- 
form its function as a medium of exchange. 

Again, of course, a rise or fall in the price of money prevents 
it from properly fulfilling another major function which arises 
out of its function as a standard of price. This third function of 
money, which for simplicity's sake we have not yet considered," 
is to serve as a reckoning of the amount of the debts people 
owe each other, and as a means of paying these debts when the 
agreed time of settlement arrives. Now the chief way in which 
debts are contracted is for a seller to deliver commodities to a 
buyer, and for the buyer to postpone, by agreement, his pay- 
ment for them. This function of money, which is to bridge the 
gap of time which often in practice must occur between the two 
halves of an exchange, is sometimes alluded to as the function 
of money as a means of deferred payment : sometimes, a#** a 
store of value." It is obviously this function, above all import- 
ant in the modern world that changes in the " price " (the 
buying power) of money impair most of all. For how can money 
measure truly the amount of a debt over a space of time, if over 
the same space of time a given amount of money is itself chang- 
ing in price ? Again, unstable money upsets the necessary cal- 
culations of all entrepreneurs, since their function of producing 
goods takes time. If they buy raw materials, when prices are 
high, and if, when they come to sell the finished product, there 
has been a sharp fall in the level of price while they were busy 
producing, they may be ruined. These are naturally only the 
most obvious cases of the damage caused to the mechanism of the 
market by unstable money. 

1 This is above all true when the purchase which he contemplates is a purchase 
of an investment. But to develop this point would be to anticipate the argument 
of the next chapter. 

* Why, however, is it universally observed that men are more anxious to hold 
on to their money when prices are falling than to hold on to their goods when 
prices are rising ? The answer is, no doubt, that money is the universal " good,*' 
the fetish of wealth, which gives its possessor the choice of any particular " good." 
Once he has spent it, he has only the particular good he has bought and no others. 
His boundless choice has gone. 



100 THE COMING STRUGGLE FOR POWER 

But we have already been driven to the conclusion that money 
is f and must always remain, just one particular commodity 
or, and this is the same thing, must be kept convertible into one 
particular commodity at a fixed rate. Hence the price of money 
must vary with every variation in the price of the chosen com- 
modity. For example, if the chosen commodity is gold its price 
will (and did, in fact) go down if a new and more easily worked 
gold field, or a cheaper way of working the present ones, are dis- 
covered. On the other hand, if the demand for gold is increased 
by more communities adopting it as the basis of their money, 
or if important new industrial uses for it are discovered, and the 
supply of it does not proportionately increase, its price will go 
up. 

Thus the price of any Commodity money can only remain 
stable in the unlikely event of the supply of the selected com- 
modity happening to increase or decrease exactly in the same 
proportion as the demand for it, both as money and as an or- 
dinary useful commodity. This has never happened, and money 
has never in fact been stable in price. It has not, however, been 
as unstable as might be supposed from this analysis. If the in- 
creased demand for money which arose during the last hundred 
years as a result of the enormous increase of the number of ex- 
changes which took place that is, the vast increase in the 
world's trade had been allowed to have its direct effect on the 
price of gold, gold would have risen (and everything else would 
have fallen) in price to such an extent and with such Rapidity 
that trade would have become impossible. 1 As a matter of fact, 
however, vast " economies," as the economists call them, were 
effected in the use of gold. In the first place, it was found that it 
was not necessary for actual gold to circulate in order to effect 
exchanges. Pieces of paper would do as well, and it was found 
possible to keep those paper notes stable in price in terms of 

1 Dr. Hayek (see Prices and Production) denies this, and considers that a fall 
in prices due to increased trading with the same amount of money is always 
healthy. It would be interesting, and not perhaps impossible, for an historical 
statistician to calculate the fall hi the price-level which would have been necessary 
to carry on the increase in trade between say, 1800 and 1000, had there been no 
increase in the circulation of money. Perhaps even Dr. Hayek would admit the 
catastrophic social consequences of such a fall in prices, even though he might 
still be able to show that by having allowed it to take place " the structure of 
production " would never have been distorted and so crisis avoided. 



UNSTABLE MONEY 101 

gold " to maintain convertibility " even though more notes 
(in moderation) were issued than there was gold to back them 
with. This, as we have seen, is the economy of Managed 
money. 

Far more important, however, was the economy effected by 
the growth of Bank money. Even in countries, like nineteenth- 
century Britain, in which actual gold circulated as coin, this did 
not mean that a direct Commodity money was being used as the 
predominant current money: For much the larger proportion of 
the actual money necessary to circulate commodities did not 
consist in nineteenth-century Britain of these bits of gold. On 
the contrary, it consisted of Bank money, i.e. of acknowledge- 
ments of debts passed from hand to hand in the form of cheques 
and " bills." This Bank money, however, had to be kept stable 
in value with gold. This was done by making it convertible into 
gold. Hence the authorities had to see that they did not create 
too much of it, lest it lose its value. For in that event everybody 
would try to convert their Bank money into gold and Bank 
money would go out of use. It was only by means of the unpar- 
alleled growth in the use of this Bank money as a circulating 
medium that a gold famine was averted. Naturally, however, 
there was nothing to ensure that these economies in the use of 
gold, plus any increase in its supply, would always equal the 
increase in the demand for money, caused by the enormous in- 
crease in exchange transactions. Yet this coincidence alone could 
have allowed general prices to remain stable. (And even this 
coincidence, as we shall see, would not have ensured a stable 
price-level. Far from it. All the more disastrous fluctuations 
in prices, the so-called Credit Cycle, could, and would, have 
taken place just the same. But without this coincidence in 
the net supply and demand of gold, general prices must have 
moved. Their equality was a prerequisite not an assurance of 
general price stability.) In any case, the coincidence did not 
occur. 

From the middle of the last century, for twenty-five years to 
1875, prices rose. This was, no doubt, due partly to the growth of 
the use of Bank money and partly to the discovery of fresh 
gold fields, which enabled capitalism to finance many more ex- 
changes. Later on in the century (for another twenty-five years, 



102 THE COMH$G STRUGGLE FOR POWER 

1875-1900) prices fell. But whether this fall in prices, which was 
the main symptom of the great depression of the early eighteen- 
nineties, was, in fact, due to the demand for gold exceeding the 
supply, or to other non-monetary factors, which we have not 
yet considered, is another matter. The latest opinion amongst 
capitalist economists themselves is inclined to the view that the 
demand for, and the supply of, gold had much less to do with it 
than had been formerly supposed. Mr. Keynes and his con- 
temporaries, however, have only half transferred their attention 
from the monetary mechanism to events in the outside~World. 
They have only got to the half-way house which we shall des- 
cribe in the next chapter. 

There is little doubt as to what was the fundamental cause of 
the business depression of the end of the nineteenth century. 
What happened was that the products of two formidable new 
industrial nations, Germany and the United States, began at that 
time to appear upon the world market and to compete with the 
products of Great Britain. Undoubtedly, such competition had 
its repercussions in monetary affairs. The new industrial nations 
naturally insisted upon setting up their own gold reserves in- 
dependently of the Bank of England. And this helped to cause 
that shortage of gold, and consequently of money, which on a 
superficial view appears to be the reason for the depression. 
Even such a realist as Bisiaarck, the leader of one of the new in- 
dustrial competitor?, seems to 'have been content to regard the 
competition for gold &s the important thing. Hence, his well- 
known remark that the powers, each trying to accumulate gold, 
were like a number of men, lying in the same bed, and all trying 
to cover themselves with one blanket. The comparison is just, 
if the blanket symbolizes not merely the world's available gold 
supply but the world's available markets. It was the general 
competition of the powers, not merely their competition for 
gold, which was the cause of the depression. 

But if this was the cause of the depression of the eighteen- 
nineties, what was the cause of the comparative revival which 
occurred in the early nineteen-hundreds ? Why did not the de- 
pression, and with it the competitive rivalries of the great 
powers steadily worsen, until the logical end in war was reached 
at about the turn of the century ? How are we to account for the 



UNSTABLE MONl^T 108 

breathing-space of almost a decade and a half, from 1900 to 
1914, which was given to world capitalism ? Here, again, there 
are non-monetary factors to account for the phenomenon. 
There is above all the fact that in the eighteen-nin^ties there 
were still large areas into which the rival imperialist powers 
could expand without immediately colliding with each other. 
Africa could be, and was, partitioned, South America and 
China opened up, India more intensively exploited, Burma 
annexed. There is no doubt that it was this phase of all-round 
imperialist expansion which played the greatest part in the 
revival of the nineteen-hundreds. 

- It must be admitted, however, that the. check to the fall in 
general prices about 1900 coincided with the opening of the 
South African gold mines, and the sudden improvement in gold 
mining technique which occurred at the same time. (The master 
patent of the cyanide process is dated 1890.) Thus, although we 
must not for a moment neglect the non-monetary factors, there 
is little doubt that the actual increase in the production, and 
above all decrease in the cost of production, of gold around 1900, 
did play a part in the recovery after 1900. 

In. general, then, although changes in the price of the com- 
modity used as money have undoubtedly changed the general 
level i if prices, they have not, thanks to the immense growth 
of I^t^ money and Managed money/ changed it with such 
violence as to dislocate the mqfcbwaism trf the market. 

We have arrive3 then at the first of tTc consequences of the 
conclusion that, under capitalism, money must always be a 
commodity. General prices can never be made stable. For if, for 
example, the commodity selected be gold, then the price of 
money will vary with the price of gold. Need the commodity 
selected, however, be gold ? Gold was not by any means the 
original, nor need it necessarily be the ultimate, money com- 
modity. The proposal is now seriously made by the most ad- 
vanced theorists of capitalism, that gold should be dismissed 
from its monetary throne and a new commodity raised up in its 
stead. More exactly what is proposed is not to select any one new 
commodity but to construct from the basis of all the most im- 
portant existing commodities a new synthetic or artificial com- 
modity to serve as money. What is proposed is that a table of the 



104 THE COMING STRUGGLE FOR POWER 

prices of say sixty of the chief commodities in use in the world 
to-day should be kept ; and from this table an average price 
should be read off each day or each week. 1 When once this 
new " tabular " commodity, as it is called, is established, a 
system of Managed money (inevitably consisting predominantly 
of Bank money) is to be imposed on top of it. That is to say, the 
money of the community, which under a " gold standard " was 
managed so as to keep 1 always equal to a given number of 
ounces of gold, is now to be managed so as to keep 1 always 
equal to so m&ny units of this new composite commodity. In 
other words, money is to be so regulated as to keep the index 
number of the prices of the sixty commodities selected always 
the same. 

The first observation to make about this proposal is that its 
adoption is not in essence inconceivable. The establishment of a 
" Tabular Standard " for money is conceivable, since, under it, 
money still remains in the last resort a commodity. 

The second observation to make is that a tabular money could 
not eliminate changes in the price-level due to changes in the 
price of the money commodity. For, even if we assume that it 
proved quite possible so to manage the new money that it re- 
tained a constant purchasing power in terms of the sixty com- 
modities selected, the price of these commodities themselves 
could, and certainly would, vary in relation to the prices of all 
the other almost innumerable commodities and services which 
exist all over the world. Just because the Tabular Standard is a 
Commodity money, it does not escape the objection to all forms 
of Commodity money, namely, that the selected commodity 
or in this case commodities will vary in price. The most 
that can be claimed is that this disadvantage of Commodity 
money may be diminished by a Tabular Standard. Since the 
changes in the prices of the individual commodities composing 
the table would, it is hoped, tend to " average out " and so 
produce stability. 

1 The actual compiling of an index number of prices is by no means a simple 
matter. It is above all necessary to ** weight " the commodities selected in 
accordance with the amount which they are actually used. Jevons, Edgeworth 
and the older economists used to hold that this was unnecessary. But Mr. 
Keynes has shown, I think conclusively, that they were misapplying a law of 
physics to the problems of economics. 



UNSTABLE MONEY 105 

An apparently obvious way out of this difficulty will at once 
occur to the reader. Why restrict the composition of the new 
composite money commodity to sixty important commodities ? 
Why not include in it all commodities ? Why not take an average 
of all prices and so manage your money that it keeps these prices 
stable ? And this is what is meant, in fact, by those persons who 
advocate the adoption of a money managed, not by the price of 
any one commodity, or even list of commodities, but by the 
price of commodities in general. The objection to this solution 
is that it is in fact impossible to find a common measure for all 
objects of expenditure all over the world, on the basis of which 
to construct an average of price. The conception becomes so 
general as to lose all meaning. Mr. Keynes devotes Book II of his 
Treatise on Money to this subject and concludes characteristi- 
cally that " we are not in a position to weigh satisfactions for 
similar persons of Pharaoh's slaves against Fifth Avenue's 
motor-cars, of dear food and cheap ice to Laplanders against 
cheap fuel and dear ice to Hottentots." In other words, the con- 
ditions under which human beings live vary so greatly at dif- 
ferent points in space, and have varied so greatly at different 
points in time, that the degree of urgency of their wants is in- 
commensurable. Hence, Mr. Keynes suggests that money 
should in future be managed so as to keep its price (its buying 
power, that is) stable in terms of a relatively simple list of say 
sixty important commodities, even though this would by no 
means ensure that changes in the prices of the monetary com- 
modities would never affect general prices. 

In any case it is now admitted by Mr. Keynes, and most other 
serious economists of capitalism that this question of the sta- 
bility of the price of the commodity, or commodities, upon which 
money is based is a much less important one than had been 
supposed. We have seen that when, as in the last century, the 
price of money (the price-level) was made dependent on the 
demand and supply of even one particular commodity (gold) 
alone, the fluctuations in prices which could possibly be 
attributed to changes in the price of gold were not the import- 
ant ones. 

Just in the same way the changes in the average price of 
sixty commodities chosen to serve as the basis of a new tabular 



106 THE COMING STRUGGLE FOR POWER ' 

money, and any future changes in the demand for money, would 
not be the predominant influence acting upon the price-level. 
Therefore, it is scarcely worth the while of the economists to 
attempt to discover a monetary commodity which will remain 
stable in price. For changes in the price-level are, in fact, pre- 
dominantly due to non-monetary causes. We shall devote the 
next chapter to showing that this is now an agreed point. It has 
now been discovered by the capitalist economists themselves 
that the fluctuations in the price-level which really matter, and 
which mark the recurrent crises of capitalism, are not due to 
changes in the price of money at all. On the contrary : the move- 
ment of the general price-level up and down the credit cycle, is 
the effect and not the cause of commercial crises. The insta- 
bility of money is due to the crisis, not the crisis to the in- 
stability of money. 

To sum up. It is a characteristic of all money that it varies in 
price. (This is merely another way of saying that under capitalism 
the general price-level can never be stable.) This is due to the 
fact that money is a commodity, and all commodities are 
liable to changes in price owing to changes in the cost of their 
production or in the amount of the demand for them. Modern 
money has, however, departed a considerable distance from its 
commodity basis. It is now only indirectly a commodity. This 
has made it possible to minimize the effect of changes in the 
pj;ice of the money commodity. This has been possible even when 
money has been based on a single commodity, gold. It is now 
proposed to base money on the price of a composite com- 
modity averaged from the prices of the principal individual 
commodities. 

Such a reform would do nothing, however, to prevent the 
recurrence of capitalist crises. The next chapter will be devoted 
to a demonstration of the fact that this is now admitted by even 
the most optimistic of the economists of capitalism themselves. 
We shall show that it is now agreed that a perfect tabular 
money would not even help to eliminate crises. 1 For it has 
been discovered that prices go up and down in the disastrous 

1 Dr. Hayek would go further than this and would say that the very attempt 
to eliminate changes in prices " on the side of money,*' as he calls it, would, in 
times of technical progress, actually cause ftomnwrcifti crises. 



UNSTABLE MONEY 107 

economic switchback of the credit crisis for reasons which are 
not monetary at all. In other words, commercial crises (such as 
the present one) are not due to prices going up and then down : 
but, on the contrary, the movement of prices is the result of 
the crisis. 



CHAPTER VI 
Capitalist Crisis 

WE are now in a position to examine the true causes of the re- 
current crises of capitalism. If even the most optimistic of 
capitalist economists are agreed that crises are not caused by the 
instability of money, what are they caused by ? 

Now we have indicated in the last chapter that the truth of 
the matter is that the recurrence of crisis is inherent in the 
whole character of a system of private enterprise and compe- 
tition. The phenomena of crisis can be shown to be the in- 
evitable consequences of the essential features of capitalism, of 
the fact, that is, that capitalist production is carried on without 
plan, that its only regulating mechanism is the mechanism of 
the market, and that the wealth of the community is concen- 
trated in the hands of the small class of persons who own the 
means of production. What we shall be concerned with in these 
chapters, however, is to show that the economists of capitalism 
have, themselves, been driven to this conclusion. Let us, there- 
fore, continue to follow up Mr. Keynes' thesis. 

Mr. Keynes considers that, broadly speaking, the price-level 
depends upon one particular thing upon, that is, the proportion 
of savings to investments. In order to understand what he means 
by this, it is necessary to know the two broad categories into 
which economists divide all commodities. These categories are 
investment, or capital, goods and consumption goods, respect- 
ively. Investment, or capital, goods are, as the name implies, 
such things as looms, land drains, and power stations ; and 
consumption goods are the cotton cloth, agricultural produce 
and electric current which these capital goods help to produce. 1 

In any capitalist society, the modern capitalist economists 
continue, there are two streams which flow through the body 
politic. There is a stream of money ceaselessly passing from 
hand to hand and there is a stream of goods and services, also 
circulating until they drop out of the process by being consumed : 
and both these streams are subdivided. The stream of money 

l l am deliberately neglecting, as unnecessary to my argument, the further 
distinction between investment and capital goods, on Mr. Keynes* definition. 



CAPITALIST CRISIS 109 

is subdivided into the money which people save and the money 
which people spend ; the stream of goods is subdivided into 
capital goods and consumption goods. Now it is clear that there 
must be a connection between the spending part of the money 
stream and the consumption goods part of the goods stream, 
on the one hand, and between the savings part of the money 
stream and the capital goods part of the goods stream on the 
other. For investing is just spending your money on capital 
goods instead of on consumption goods. If, for example, you 
have spent 5 on a suit of clothes, you have bought 5 worth of 
consumption goods. But if you saved the 5 and invested it in 
one of the loans of the British Central Electricity Board, you 
would really have bought 5 worth of the " pylons " which are 
to-day bestriding the British countryside. For when the Central 
Electricity Board got your 5, they would use it to buy 5 worth 
of that particular kind of capital goods. And so one would sup- 
pose that the amount people saved, the amount they invested, 
and the demand for capital goods would always be equal. In 
the same way, one would think, the amount people spent and 
the demand for consumption goods would be equal too. What 
then do economists mean when they talk about the proportion 
of savings to investments ? What, above all, do they mean 
when they go on to say that the price-level depends on the 
proportion of investments to savings ? They tell us that they 
mean that the price-level depends upon whether the proportion 
of the community's savings to its spendings exceeds or falls 
short of the proportion of consumption goods and investment 
goods which it produces. (It may help the reader to realize that 
what is being compared is a proportion to a proportion. That is 
to say, it is ? ^^ 8 which ought to be equal to the production 
of ^S^to^Tgwd^ 8 ' The real equation is not quite so simple as this.) 1 
Now a moment's thought will show us why prices must move 
if these proportions are not equal. For clearly if we all devote, say, 
a quarter of our productive resources to producing investment 

1 In Mr. Keynes' words, " The question whether the price-level of the goods 
which are consumed is in fact equal or unequal to their cost of production " 
(when it is equal, the price-level will be stable) " depends on whether the division 
of income between savings and expenditure on consumption is or is not the same 
as the division of the cost of production of output between the cost of the goodf 
which are added to capital and the cost of the goods which are consumed. 



110 THE COMING STRUGGLE FOR POWER 

goods and three-quarters to producing consumption goods, 
then, in fact, and whether we subsequently like it or not, we 
have "saved" one quarter of our income. For only three- 
quarters of the possible amount of consumption goods will 
have been produced ; and we shall only have this three-quarters 
to consume. But is there any guarantee that at the same time 
we shall all have only spent three-quarters of our money income 
and have saved the other quarter? And if there is no such 
guarantee, what happens ? As a matter of fact, there is not 
the slightest reason to suppose that we shall always save and 
spend in an equal proportion to our production of capital and 
consumption goods. For, and this is the real point, under 
capitalism, the decision as to how much of our productive 
energies we shall put into making investment goods and con- 
sumption goods respectively, and the complementary decision 
as to how much of our income we shall save and how much we 
shall spend are made quite independently and by different sets 
of people. Naturally, therefore, the two decisions do not keep 
step. The decision as to how much new capital is to be created 
is, of course, made by the capitalists or entrepreneurs. It is they 
who decide whether new factories shall be built, new mines 
sunk, new land drained and cleared. And, naturally, they make 
the decision depend on whether they anticipate that these new 
capital goods will, if they create them, bring them in a profit. 
And this decision of theirs, be it observed, is the decision upon 
which the proportion of the community's energies which shall 
be devoted to the production of investment goods as against 
consumption goods, depends. For if the entrepreneurs employ, 
say, one-quarter of the available labour and other means of 
production, of the " factors of production," as the economists 
call them, on making investment goods, then there will be only 
three-quarters of the factors of production left for making con- 
sumable goods. 

But is it the entrepreneurs who make the other decision as to 
how much of the community's money income shall be spent on 
consumable commodities, and how much of it shall be saved ? 
They do not. On the contrary, everybody all recipients of 
money incomes, that is decides that for themselves. So what 
happens if, when the entrepreneurs have decided, and have 



CAPITALIST CRISIS 111 

proceeded in fact, to use a quarter of the factors of production 
for investment goods, leaving only three-quarters to produce 
consumption goods, the public decides only to save one-eighth 
of its money incomes and to spend all of the remaining seven- 
eighths on consumption? Naturally the only result can be a 
rise in the prices of all consumption goods. For the entrepreneurs 
have only produced three-quarters, while the consumers are 
demanding seven-eighths of the possible output of them. Hence, 
demand exceeds supply, and prices rise. Conversely, if the 
entrepreneurs had decided to employ only one-eighth of the 
factors of production on producing investment goods, and 
seven-eighths on producing consumable goods, and the public 
had saved one-quarter of its money, and had, therefore, only 
three-quarters of it left to spend, the prices of consumable goods 
must fall. For there will be more of them and less money to buy 
them with, viz. supply will exceed demand. This proposition is 
the foundation of a whole school of thought which, in one form 
or another, is being expounded by several capitalist economists. 1 
It is, on the other hand, very far from being the whole story. 

1 The version of the theory propounded by Dr. Hayek and his school sounds 
very different from Mr. Keynes' version. It approaches the problem from 
another angle, and Dr. Hayek takes a much less optimistic view of the possibilities 
of remedial action. But on the broad facts of what happens in the credit cycle 
they are, as I understand them, in agreement. For Dr. Hayek's version of the 
theory relies equally with Mr. Keynes^ on the proportionate demand for capital 
and consumption goods, respectively, as the key to the situation. Certainly Dr. 
Hayek's conception of " the structure of production " which exists at any given 
moment is a useful one. His point is that there are not two broad categories of 
goods, capital goods and consumption goods. There is an infinitely graded hier- 
archy of goods, from machine tools at one end to a toothbrush at the other. 
Moreover, he points out that many goods can be used at one time as capital 
goods and at another time as consumption goods. Thus he considers that the 
effect of, say, an increase of saving with its consequent decrease hi demand for 
consumption goods, and increase in demand for capital goods, alters " the struc- 
ture of production " by making it longer and narrower by pulling it out like a 
concertina, or, as Dr. Hayek puts it, most elegantly, as befits a Viennese, by 
opening it like a fan 1 (Dr. Hayek seems to slur over a point which we shall 
consider in a moment, of whether new savings do always increase demand for 
capital goods by increasing investment.) Now * 4 the structure of production " is 
simply the way in which things are produced at a given moment. That is to say, 
if it is long it means that production is a long, elaborate, highly mechanized 
business, employing a great deal of capital. If short, that it is a simple, direct, 
relatively unmechanized business, with little capital. Thus an increase in demand 
for investment goods an increased use of capital in production is what he calls 
lengthening the structure of production. 

(All this seems to be merely an approach towards the Marxian conception of 
" tne higher organic composition of capital." And Dr. Hayek is quite right, if 
hardly original, in saying that this tendency is at the root of some of the worst 
troubles of capitalism.) 



112 THE COMING STRUGGLE FOR POWER 

(The prices of investment goods themselves, for example, are 
said to depend upon a different, though related, combination 
of factors. Again, we have not yet taken any account of another 
factor, which, according to Mr. Keynes, is equally important 
namely, the behaviour of the banking system. It is clear, for 
example, that the price which entrepreneurs have to pay for the 
credit which can alone enable them to take command of, say, 
one-quarter of the factors of production and turn them on to 
producing investment goods, will have a vital bearing on the 
matter. But more as to that later.) / 

All the same, once this basic proposition has been grasped, 
it is not difficult to understand the new explanation of the 
recurrence of sharp fluctuations in the general price-level and 
so of crises. For, it is clear from the above that broadly speaking 
whenever the entrepreneurs are producing capital goods to a 
greater amount than the public is saving, prices must rise, and 
whenever the opposite is happening prices must fall. Now it is 
suggested by Mr. Keynes that a capitalist community saves a 
surprisingly constant amount of its income from year to year. 
The factor which changes suddenly is that of investment. For 
entrepreneurs may easily wish to invest far more one year than 
they do the next. A vital new technical discovery may suddenly 
offer them the expectation of high profits. (The invention of 
steam railways acted in this way in Great Britain in the last 
century. The invention of the motor-car had the same effect in 
America this century.) Or a new country may, as we have seen, 
be suddenly " opened up " and made safe for every kind of 
investment ; or a war, requiring immense quantities of munitions 
and supplies, may break out. On the other hand, conditions 
may suddenly become unfavourable for investment. For 
example, political and social instability may quickly increase 
the risk of long-term investment to a prohibitive point. Or 
again, and this factor is consistently neglected by capitalist 
economists, the competition of some new group of producers 
may begin to drive down the prices of several important com- 
modities to a point where investment in their means of produc- 
tion is unattractive. This factor is becoming, as capitalist 
methods of production become universal, the dominating fact 
of the whole situation. Thus, the factor of investment is a highly 



CAPITALIST CRISIS 118 

variable one, while the factor of saving is relatively stable. 
Hence, we should expect, and we do actually find, that invest- 
ment sometimes greatly exceeds and at other times as greatly 
falls short of saving : and that, accordingly, the price-level 
moves sharply up and down. 

It would be out of place to describe the considerable intricacies 
of this theory of price determination in any but a specifically 
economic work. All the more so since, as I have already com- 
plained, there is no agreement in detail between the numerous 
economists who are now offering us various versions of it. Sub- 
stantially, however, it should, I have personally no doubt, be 
conceded that orthodox economic science has at length ap- 
proached the diagnosis of the real cause of capitalist crisis. 
Whether, however, this diagnosis is as new as the capitalist 
economists, who are scrupulously ignorant of any but "respect- 
able " economic views, suppose, is another matter. For what in 
the end does the new theory amount to ? It amounts to the 
discovery that the ruinous crises, the catastrophically sharp 
changes in the price-level, to which capitalism is subject, are 
not due to the misbehaviour of money, to the instability of the 
weather, or even to the malice-aforethought of bankers, but 
to the inherent character of the capitalist system. 1 For it is now 
agreed, as we have seen, that the price-level moves whenever 
investment ceases to equal savings, and that investment does 
constantly differ from savings because quite different and 
unrelated people do the investing and the saving, and do them 
without reference to each other's actions. In other words, it 
is now admitted that capitalist crises are due to the anarchy of 
production which must always characterize any system depen- 
dent upon the mechanism of the market. It has now been in 
effect admitted by the leading capitalist economists themselves 
that the true cause of the periodic breakdowns of their system 

1 Whole schools of amateur economics and sociology have been founded on 
the view that " it is all the fault of the bankers." All the various varieties of 
*' social credit " movements, all the types of " currency cranks " for several 
generations have taken the view that the bankers are exclusively to blame for 
the instability of capitalism. If only the bankers could be persuaded, or forced, 
to be more generous with credit, all would be well. The enormous potential pro- 
ductivity of modern technique (which the currency cranks do at any rate recog- 
nize) could be released, social antagonisms could be painlessly removed and 
poverty abolished. Et ego in Arcadia vixil too have lived in this economic 
Arcady. 

HP 



114 THE COMING STRUGGLE FOR POWER 

is the planlessness with which production is undertaken. Nor 
can this state of things be altered so long as capitalism endures. 
For if the amount of saving is not left to the free will of indivi- 
duals and groups of individuals, and investment that is, the 
initiation of new enterprises to private entrepreneurs, what 
is left of capitalism ? Indeed, propagandists of both sides often 
pick out this particular feature of capitalism as its essential 
characteristic, and refer to " the system of private enterprise/' 

Some capitalist economists, however notably Mr. Keynes 
do go on to suggest a method by which, they claim, the recur- 
rence of crises can be avoided and yet " private enterprise " 
retained. They suggest, however, that this can be done only if 
certain very notable measures are taken by the Governments 
of the world. Let us follow up Mr. Keynes' suggestions, for they 
raise very sharply the whole question of the possibility of the 
continuance of capitalism. Moreover, they reveal the inter- 
connection of the recurrence of crises, the fourth characteristic 
of present-day capitalism, with our other three characteristics, 
unstable money, monopoly and nationalism. 

Mr. Keynes, as we have seen, considers that crises occur when 
investment ceases to equal savings. Now this can happen either 
by a change in the amount of savings or in the amount of invest- 
ments ; but in practice, savings, we noticed, were the more 
stable factor and the typical fluctuation begins with a sudden 
change in the amount of investment. 1 This is very often due 
to a change in the conditions of production to a new invention 

1 Dr. Hayek dissenting. Dr. Hayek usually starts off the process with a change 
in the volume of savings in practice, I should have thought, an unusual occur* 
rence. He does not mention, at any rate in Prices and Production t the possibility 
of the original impetus coming from a change in the urge to investment on the 
part of the entrepreneurs. This is, I take it, because this urge can never take 
effect unless the bankers " accommodate " the now eager entrepreneurs. And if 
the bankers do accommodate the entrepreneurs this is tantamount to the process 
of change starting by the " injection," to use his words, of new money in the 
form of producers* credits a case which he does consider. 

Yet it seems far fetched to describe, say, the railway boom of the last century 
as being due to an " injection " of new money in the form of producers' credits ! 
Surely it would have required bankers of that super-conservatism, of which Dr. 
Hayek fondly dreams, but frankly admits that he may never live to see, to have 
refused to allow railways to be built because there had not been sufficient prior 
voluntary saving to pay for them ? In a sense, however, Dr. Hayek may be right 
in saying that that would have been the only way to mitigate recurrent crises 
under capitalism. For this almost amounts to saying that the way to have pre- 
vented crises in capitalism was to have prevented capitalism from ever j 
And there is a lot in that. 



CAPITALIST CRISIS 115 

\ 

or a sudden increase or decrease in political stability. "For these 
changes increase or diminish the investing entrepreneurs' 
expectations of profit. But their expectation of profit does not 
depend uniquely on the returns which they anticipate. It 
depends also on the cost of investment. That is to say, it depends 
on the rate of interest which the entrepreneurs have to pay when 
they come to borrow the money necessary for the production 
of investment goods. For in modern conditions, the entrepreneurs 
do not, in the typical case, own the very large sums of capital 
necessary for considerable new enterprises. Even if, excep- 
tionally, a group of entrepreneurs do themselves own sufficient 
resources to finance their proposed enterprises, it makes no real 
difference for their money will already be employed elsewhere 
and it will cost them the prevailing rate of interest to withdraw 
it from its present employment and devote it to the new enter- 
prise. Thus we may say that entrepreneurs borrow from the 
whole property-owning community, either, in the case of a 
short loan, through the banks acting as middle men, or, in the 
case of a long loan, by an issue of bonds (or sometimes shares), 
with an " issuing house " acting as middle man. Naturally, ' 
therefore, the question of whether some new enterprise, or . 
piece of investment, shall be undertaken or not depends in fact 
on whether the rate of profit which it is expected to yield exceeds, 
sufficiently to cover the risks involved, the rate of interest which 
the entrepreneurs will have to pay on the money borrowed to 
undertake it. Thus the volume of investment does not depend 
simply on the expectation of profit, but on the proportion of the 
expected rate of profit to the current rate of interest. Hence, 
the volume of investment can change, not only because of a 
change in the expectation of profit, but because of a change in 
prevailing rates of interest on borrowed money. ^/ 

Can anyone, however, control the prevailing rates of interest ? 
The answer to this question is vital to Mr. Keynes' argument, 
for clearly, if there exists anyone who can effectively control 
the rates of interest, he may be able to control the volume of 
investment. Since even though he would not be able to control 
the expectation of profit and so the inducement to investment 
-he would be able to control the second determinant, the cost 
of jftyestment. Hence if, for example, he wished to keep the 



116 THE COMING STRUGGLE FOR POWER 

volume of investment constant, for every change in the entre- 
preneurs' expectations of profit, he might be able to make an 
equal and opposite change in their costs of investment. In other 
words, there will always be, in pure theory, a change in the rate 
of interest on borrowed money which will just balance any 
change in the entrepreneurs' expectations of profits. Hence, if 
savings are constant, this change in the rate of interest will 
keep the volume of investment equal to the rate of savings. This 
rate of investment, Mr. Keynes calls " the natural rate of in- 
terest." If " the market rate," that is the actual rate prevailing, 
is the same as the natural rate, then, investment will equal 
savings. And if investment equals savings, the price-level, Mr. 
Keynes believes, will be stable. 

Hence, it is alleged that he who can control the rate of interest, 
and so the volume of investment, controls the price-level. Mr, 
Keynes' answer to the question of whether anyone can actually 
control the rate of interest is unequivocal. He believes that the 
bankers, ultimately the central bankers, can and sometimes do 
control the rates of interest. He considers that the central banks 
that is, in Great Britain, the Bank of England ; in America, 
the Federal Reserve Board ; in France, the Bank of France ; 
in Germany, the Reichsbank, and so on by altering their rate 
of short-term lending their " bank rate " or " re-discount 
rate," as it is called can, in fact, control all rates of interest. 

This is a somewhat surprising claim, but some evidence can 
be brought in support of it. Indeed, I think that the chain of 
reasoning by which Mr. Keynes connects the bank rate with 
what he calls the " bond rate," that is the prevailing rate of 
long-term borrowing, is in itself sound. The chain, however, is 
very tenuous in the sense that it is very abstract. Even if it be 
admitted that in a social vacuum, any change in bank rate will 
sooner or later be reflected in a change in bond rate, that does 
not in the least mean that in the real world we need always 
expect that the one will follow the other. On the contrary, there 
are always so many hard and intractable " other factors," so 
many wars and rumours of wars, successful and unsuccessful 
imperialist adventures, successful and unsuccessful strikes by the 
working class, so many changes and chances, that the establish- 
ment of the fact that a change in bank rate, if nothing else 



CAPITALIST CRISIS 117 

interferes with the process, will result in a change in the bond 
rate, has only a very qualified importance. Let us, however, for 
the purposes of following Mr. Keynes' argument to its logical con- 
clusion, assume that the claim is justified. If we make this as- 
sumption we shall find that Mr. Keynes' argument has led us to 
the conclusion that central banks can, by always keeping the 
market rate of interest equal to the natural rate, maintain a 
stable price-level. Hence, Mr. Keynes' view is that although the 
cause^of these short, sharp, and altogether disastrous fluctuations 
in the price-level which we call crises, are not monetary ; that, 
on the contrary, they arise from the fact that under a system of 
private enterprise the function of investment is inevitably separ- 
ated from the function of saving, yet a monetary cure is pos- 
sible. For the central banks can by appropriate variations in the 
rates of interest always offset the inherent instability of the 
system and so maintain equilibrium. 

Is there the slightest justification for this claim ? x 
Now, it may be that enough has already been said to show 
that Mr. Keynes' claim is quite unjustified ; that it neglects the 
most important factors of the situation. At the same time, in- 
stead of attempting its detailed refutation, let us assume for a 
moment that Mr. Keynes' theory is sound. For the surprising 
thing is that it will still be possible, even on the basis of this 
assumption, to prove that in fact no improvement in the mechan- 
ism of capitalism is possible along these lines. 

1 Dr. Hayek does not think the claim to be justified. He thinks that the best 
bankers could do for capitalism even in theory, and he despairs of them doing so 
much in practice, is to keep the rate of investment down to the rate of savings 
and so prevent any booms developing. And this indeed is " a hard saying " for 
it would mean keeping the business world in what business men would certainly 
consider a permanent state of depression, with, in times of technical advance, a 
steadily falling price-level. (Incidentally Dr. Hayek has not a word to say about 
the automatic and perpetual increase in wealth which such a policy would bring 
to all creditors and rentiers, or about its social consequences at all.) As Dr. Hayek 
puts it, with a certain ferocity of manner, " bankers need not be afraid to harm 
production by over-caution, even in times of general depression.'* But once any 
expansion has begun nothing can be done and a crash is bound to come. As to 
how the crash actually does come both Mr. Keynes and Dr. Hayek point to a 
sudden deficiency of working capital. (See Prices and Production, pages 81-87.) 

Moreover, when the crash has come, Dr. Hayek sternly forbids any attempt at 
recovery by monetary expansion. We must wait for the slow adaptation of the 
structure of production to the new situation. Nothing we can do can hasten the 
time when it will again be possible to employ all the factors of production. Or, 
rather, if we do try a little monetary expansion we shall get a temporary boom 
but only at the cost of a worse crash later on. ^ 



118 THE COMING STRUGGLE FOR POWER 

Let us assume then that a central bank, acting on Mr. Keynes* 
instructions, could indefinitely maintain a stable price-level 
within the community over the currency of which the central 
bank in question presided. Let us, in other words, give capitalism 
the full benefit of assuming that a very great improvement in its 
present organization is possible. Let us then follow out, always 
on the basis of this assumption, the possible effects in the world 
of to-day of a central bank regulating its rates of interest so as to 
keep investment equal to savings. Now it can only do this by 
varying the market rate of interest every time the natural rate 
changes, that is to say, every time that the expectation of 
profit for entrepreneurs from new investment either grows or 
diminishes. (Or, of course, every time that the rate of savings 
grows or diminishes. But in practice this is a much more stable 
factor.) 

Now as a matter of fact, central banks do no such thing. 1 They 
change their rate of lending in such a way as to protect their 
reserves of liquid cash. Therefore, if they are members of an 
international gold standard system, if, that is, their bank 
money is convertible into gold, and there is no prohibition of the 
export of gold, they lower their rates of interest when they are 
attracting plenty of gold, and raise them in order to stop an 
outflow of gold. Thus, just so soon as we consider the possi- 
bilities of applying the new theory we come up against the inter- 
national question. We must, therefore, consider the inter- 
national use of money for a moment before going on with our 
attempt to follow up the consequences of applying Mr. Keynes' 
theories in practice. 

Now what is the essential difference between the use of money 

1 Dr. Hayek in several passages seems to assume, on the contrary, that they 
always do so (see Prices and Production, page 75 et infra). This is no doubt because 
he writes as if the rates of interest, or to use his phrase, " the loan market " was 
a perfect market, which responded perfectly to the supply of savings and the 
demand for capital. In that case, of course, the bankers would be mere automata 
and the market rate of interest would in fact always be the natural rate. Yet, 
even apart from the complication of international factors, which we are just 
going to consider, is not this a most artificial assumption ? For in that case, as 
was suggested in the case of the invention of railways, bankers could never allow 
of the development of any major technical discovery unless there happened to 
have been a previous increase in the rate of savings. (For presumably the existing 
rate of savings was absorbed by existing capital development and renewal 
leaving nothing over for sudden new technical progress.) Thus what Dr. Hayek 
really proves is that there can be no rapid technical progress under capitalism 
without forced savings, booms and consequently crises. 



CAPITALIST CRISIS 119 

within a country and its use for the purpose of exchanges be- 
tween countries ? We have seen that the predominant current 
money within all the big capitalist states to-day is Bank money. 
In other words, we exchange our commodities amongst our- 
selves by handing around acknowledgements of debts. And we 
have gradually learned to rely on these memoranda of debts 
always cancelling each other out if they are given long enough to 
do it in. Thus actual payment in cash is never demanded (Bank 
notes and coins have become, in fact, merely the small change 
of Bank money). And the system works. The payments do 
balance each other, because the percentage of default is negligible 
and (this is the real point) there are no serious interruptions in 
the never-ending flow of exchanges. The velocity of the flow may 
vary but that is all. 

All this, however, only applies to a limited degree to inter- 
national trade. It is true that Bank money is now extensively 
used for international trade (above all, until this year at any 
rate, the sterling bill on London was the predominant instru- 
ment). But it is not used exclusively as it is in internal trade. 
That is to say, payments are not allowed to run on for ever in 
the perfect confidence that they will balance themselves at in- 
finity, if not before. When at any given moment the balance 
of payments stands high against one country, and high in favour 
of another, the latter country, under the gold standard system, 
in effect declares that the payments have ceased to balance and 
that consequently the balance must be paid ! And paid it is in 
hard cash by the shipment of gold coin or bullion from one 
country to another. 

It is not difficult to see why these periodic international " set- 
tlement days " for that is what it comes to are considered 
necessary to international trade. It is natural that people should 
have less confidence and be willing therefore to allow less credit 
in international transactions than in national ones. For the 
exclusive use of Bank money, without periodic payments of 
balances in cash, obviously depends on all parties having con- 
fidence that the flow of exchanges will never be interrupted : 
that they are in commercial relations with each other for ever. 
Clearly, however, this is much less true if the transactions in- 
volve moving commodities over national frontiers ; if, in fact, 



120 THE COMING STRUGGLE FOR POWER 

the trade is international. The numerous areas of absolutely in- 
dependent sovereignty into which the world is cut up enormously 
increase the risk of sudden interruptions of exchanges. It is not 
necessary to speak of the absolute interruption of international 
exchange which is effected by the outbreak of war. Even in 
peace-time, and to an ever-increasing extent, as we saw in 
Chapter IV, interferences with, and interruptions of, inter- 
national exchange are becoming part of the deliberate policy 
of all states. Tariffs, " administrative protection," restrictions 
in dealings in foreign exchange, import licences, export bounties 
and a host of other devices are, we saw, part of a highly 
developed policy of economic nationalism adopted by almost 
all states. 

No wonder that traders have no confidence that payments 
between nations will always in the end balance each other. 
No wonder they have no confidence that the flow of exchanges 
will continue indefinitely, and that there will always be time 
and opportunity to offset any temporary debit balance. They 
know that the flow of international exchanges is constantly sub- 
ject to partial interruption, and may at any moment be stopped 
altogether by war. No wonder, therefore, they are increasingly 
determined to get their cash while they can, decreasingly willing 
to let bills " run " for long periods. 1 Hence, the international 

1 Marx, of course, twice expressed this point most forcibly. Thus in the Critique 
of Political Economy, page 197, he writes : " Therefore, whenever such a thing as 
a chain of payments and an artificial system of settling them, is developed, money 
suddenly changes its visionary nebulous shape as a measure of value, turning 
into hard cash or means of payment, as soon as some shock causes a violent 
interruption of the flow of payments and disturbs the mechanism of their settle- 
ment. Thus, under conditions of fully developed capitalist production, where 
the commodity owner has long become a capitalist, knows his Adam Smith, and 
condescendingly laughs at the superstition that gold and silver alone constitute 
money or that money differs at all from other commodities as the absolute com- 
modity, money suddenly reappears not as a medium of circulation, but as the 
only adequate form of wealth, exactly as it is looked upon by the hoarder. . . . 
This sudden reversion from a system of credit to a system of hard cash heaps 
theoretical fright on top of the practical panic ; and the dealers by whose agency 
circulation is affected shudder before the impenetrable mystery in which their 
own economical relations are involved." 

Again in Capital, on page 120 of Eden and Cedar Paul's translation of Volume I, 
where he restates the argument of the earlier book, he writes even more aptly of 
what is actually happening to-day : " Whenever there is a general disturbance 
of this mechanism, and no matter what its cause may be, money suddenly quits 
the ideal form of money of account and materializes as hard cash. Profane com- 
modities can no longer replace it. The use-value of commodities becomes value- 
less, and their value is routed by their own form of value. A moment earlier, the 
bourgeois, drunk with the arrogance of prosperity, was ready to declare that 



CAPITALIST CRISIS 121 

gold standard is a device by which international balances are 
automatically settled in hard, golden cash whenever the bal- 
ance of payments tilts more than a little against one nation and 
in favour of another. 

The gold standard works very simply. Say that the balance 
of payments tilts against Great Britain. This means that the 
value of all kinds of imports exceeds the value of all kinds of 
exports, including all the services which we do for foreigners. 
Foreigners selling goods in Britain are paid in pounds and then 
sell the pounds to buy units of their own currencies. British 
exporters, on the other hand, are paid in foreign currencies and 
buy pounds in order to bring the money home. Hence, if the 
value of imports exceeds the value of exports, more pounds will 
be sold than bought. Therefore, the price of pounds in terms of 1 
other currencies will fall. But both pounds and the other cur- 
rencies are, under the gold standard, convertible into gold at a 
fixed rate. Hence, if pounds get cheaper and other currencies 
dearer, it will pay the foreign importer to convert his pounds 
not straight into, say, dollars, but first into gold and then to 
take the gold across the Atlantic and convert it into dollars. 
And in fact as soon as pounds have got cheaper and dollars 
dearer to a sufficient degree to make the difference cover the 
cost of shipping the gold, an export of gold occurs. 1 

money was a pure illusion, and to say that commodities were the only money. 
Now, when the crisis comes, the universal cry is that money alone is a commodity. 
As pants the hart for cooling streams, so does his spirit pant for money, the only 
wealth." 

In these passages Marx does not confine the need for an ultimate concrete 
means of payment to international trade. He shows that need arises whenever 
there is an interruption from whatever cause to a chain of payments ; and this 
may happen within a country if a crisis becomes sufficiently severe. But as he 
points out a few pages later, in Capital, the risk of such interruptions is greatest 
in international trade. 

1 1 am deliberately neglecting the complication introduced by the question of 
foreign lending. As we noticed in Chapter IV, the export of capital from state 
to state is an essential part of modern capitalism. Hence, what really constitutes 
international equilibrium is that the value of a country's exports (of all kinds) 
and interest on previous foreign loans should equal the value of its imports, of 
all kinds, plus the annual rate of its foreign lending of capital. The point is an 
important one in practice since the export of capital will sometimes go on after 
there is no real balance of payments to justify it. Thus, a central bank's real task 
is to make its state's foreign lending equal its foreign balance of payments. The 
immediate effect of an increase in bank rate is not to attract gold by altering the 
balance of trade, but to do so by checking foreign lending and/ or increasing 
foreign borrowing. This complication does not, however, alter the general prin- 
ciples involved. 



122 THE COMING STRUGGLE FOR POWER 

Now the central bank uses its power to vary the rates of in- 
terest in order to protect its reserve of liquid cash consisting 
chiefly of gold, Hence, when an export drain of gold occurs, the 
rates of interest inside the country which is losing gold are put 
up. But how do these higher interest rates stop the export of 
gold ? In the last analysis (and neglecting many complicating 
but inessential factors) they do so by decreasing the volume of 
investment and so depressing the price-level. For a lower price- 
level will, of course, necessitate lower money costs of produc- 
tion. In plain English, a lower price-level necessitates lower 
wages, and it secures them by inflicting losses on entrepreneurs 
until they get wages down. (But this, as Mr. Montagu Norman, 
Governor of the Bank of England, discovered in 1916, is neither 
an easy nor a safe process.) And lower wages, other things being 
equal, increase a country's competitive power in the world 
market, and thus lower imports and increase exports. Equili- 
brium in the balance of payments is re-established and the 
" gold drain " stopped. Presumably that drain started, by costs 
of production having gone down in some foreign country, or 
having gone up at home, thus upsetting the relative price-levels. 
Hence, the international gold standard may be regarded as 
primarily a device for ensuring that central banks, in fact, vary 
their rates of interest in such a way as to keep costs of pro- 
duction of their respective states on a level. 

We can now return to our attempt to follow up the conse- 
quences of applying Mr. Keynes' theory in practice. How is the 
above compulsion upon central banks consistent with Mr. 
Keynes' instructions that they should in future vary their rates 
of interest so as to keep investment equal to saving in their own 
country? The answer is that it is not consistent at all. For 
variation in the urge to investment, owing to changes in the 
expectation of profit, are essentially national phenomena. They 
occur quite unevenly over the world's surface. For example, 
conditions may be such that American entrepreneurs are all 
" bulls," that is to say, they all believe that the production of 
any amount, and any kind, of new capital goods will bring them 
in immensely high rates of profit. In this case, it will be neces- 
sary for the Federal Reserve Board to make them pay very high 
interest rates if it is to prevent them from investing far in excess 



CAPITALIST CRISIS 128 

of savings. At the same moment, however, conditions of great 
political instability may have arisen in, say, Germany, so that 
German entrepreneurs are all " bears," and nothing but the 
establishment of very low rates of interest by the Reichsbank 
will induce them to keep the rate of investment up to the rate of 
saving. Yet if the Reichsbank does in such a situation bring 
down interest rates to this low level, the effect under a gold 
standard will not be primarily to increase investment in Ger- 
many at all but merely to lose gold to America. And the receipt 
of that gold by America will tend to make the Federal Reserve 
Bank, not raise its interest rates, as the American internal 
situation demands, but lower them and so add fuel to the 
flames of the American " bull " movement. And this will cause 
American investment to run still further ahead of savings. To 
use Mr. Keynes' terminology, " the natural rate of interest " 
(i.e. that rate which will keep investment equal to savings) varies 
nationally. Hence, the price-level tends to vary nationally also. 
Yet the gold standard enforces an international price-level. 
Hence it forces a central bank to vary its interest rates not 
in order to keep its own country's price-level stable, but 
actually and deliberately to alter that price-level in conform- 
ity with changes which are spontaneously occurring in other 
countries. 

It is easy to see, moreover, that this difficulty is deeply rooted 
in the national capitalist system of to-day. It is an expression 
of the fact that while most economic factors are determined 
nationally, the monetary system is (or was) international. Mr. 
Keynes, himself, acknowledges this when he raises " a doubt 
whether it is wise to have a currency system with a much wider 
ambit than our banking system, our tariff system and our wages 
system." 1 It is, in fact, the nationalism of the banking, tariff, 
wages and general economic policy of the modern capitalist 
states which causes many of these sharp oscillations in entre- 
preneurs' expectations of profit. Hence-^the inducement to in- 
vest, and consequently the natural rate of interest, varies sharply 
between different nations at the same moment. And so central 
banks would be confronted with an impossible task if they were 
asked to combine internal and external price stability. Yet, as 
* A Treatise on Money, Vol. IL, page 884. 



124 THE COMING STRUGGLE FOR POWER 

we have noticed in preceding chapters, the national rivalries of 
all states are bound to increase and not diminish. 

In fact, of course, the rivalries have reached, at this time of 
writing, to such a point of frenzy that within thirteen months 
of Mr. Keynes raising his doubt (September 1930) as to the 
possibility of an international currency standard in a nationalist 
world, the then existing golden international standard has been 
shattered. International exchanges had been so hampered and 
harried, the normal balance of payments between nations so 
disturbed, that huge balances began to pile up against some 
countries notably, against Great Britain. (Britain was hardest 
hit partly because she had not in any case fully adjusted her 
price, wage, and costs system to that of the rest of the world 
when she returned to gold at the old parity in 1925.) Such bal- 
ances are, as we saw, automatically paid in gold, while the 
standard is preserved, and accordingly an unparalleled export 
of gold from the Bank of England began. This drain drove 
Great Britain, and following her example, half the rest of the 
world, off the gold standard in the autumn of 1931. 

It is worth while to notice why, in fact, Britain abandoned the 
gold standard. She abandoned the standard in order to preserve 
the gold. She ruptured the convertibility of sterling into gold in 
order to preserve the remaining stock of gold in the Bank of 
England. In one sense, Britain, therefore, did not so much aban- 
don gold as resolve to cling desperately and at all costs to what 
gold remained to her. This consideration may not be without 
significance in determining what other standards, or whether no 
international standard at all, are practicable alternatives to 
gold. 

We have now come to the conclusion that the attempt to 
avoid crises by the adoption of the maintenance (by savings and 
investment parity) of a stable internal price-level, as the objec- 
tive of central banks, is, in the nationalistic world of to-day, 
quite inconsistent wi#j the maintenance by them of the inter- 
national gold standard. 1 Mr. Keynes is aware of this ; and he 

1 Dr. Hayek would say, and American experience in 1929 seems to bear him 
out, that a crisis can occur even when the central bank has managed by luck or 
skill to keep the price-level stable. For in this case what has happened is that 
the market rate of interest has exceeded the natural rate, investment has gone 
ahead of savings, and so the structure of production has been distorted. But this 



CAPITALIST CRISIS 125 

is unable to do much more than suggest certain devices for 
minimizing the difficulty ; and for the rest, he hopes for the best. 
He hopes, that is, for a time when the great states will be more 
" reasonable." We have seen, however, that the great states 
are inevitably getting more and not less nationalistic more 
" unreasonable." 

Thus the capitalist world to-day is facing a dilemma. How 
is the most vital device of the system of free exchange 
how is money to be controlled ? Three possible alternatives 
exist. 

First alternative. The first alternative is that the international 
gold standard should be re-established where it has broken down 
and maintained where it still exists. All the more conservative 
theorists, and certainly many of the very ablest theorists, of 
capitalism, together with nine-tenths of the practical bankers 
and financiers, advocate this course. Its great recommendation 
is that it does at all costs maintain the world market. It pro- 
vides, in gold, some objective commodity in which in the last 
resort international balances can be settled. Thus it provides 
an international means of payment. And a means of payment 
is the essential device for allowing some credit in exchanges. 
Without it no debt can be allowed to arise, and exchanges (since 
payment must always coincide in time with delivery) become 
little more than barter, with the prices of the commodities ex- 
changed reckoned in a money of account. The fact that it was 
known that international balances would be automatically set- 
tled in gold at no very distant date has been the ultimate and 
indispensable basis of confidence without which these balances 
would hardly have been allowed to arise at all. 

On the other hand, the preservation of the international gold 
standard means the abandonment of any opportygitj&jeggn to 
attempt to apply Mr. Keynes' policy for 
stable internal price-level. Hence, it mea 
attempt to free the capitalist system 

laxity and over-lending on the part of the banks 
symptom of a rising price-level, for the tenden 
balanced by technical progress, and so a reduction 
banks not overlent, would have resulted in a fallir 
But even if Dr. Hayek is right, this does not 
impossible for the banks to combine external and 
understand by internal stability a slowly dropping 




126 THE COMING STRUGGLE FOR POWER 

crisis. 1 But can capitalism stand the continual repetition of such 
crises ? Many even of its warmest supporters now admit that it 
cannot. Let us then examine the consequences of embarking 
upon the policy of attempting to mitigate commercial crises 
according to the new technique. 

The second alternative. The second alternative is to break up 
the international gold standard and to attempt to establish no 
international substitute for it. In the case of Great Britain and 
of more than half the rest of the world, such a course would 
to-day be to acquiesce in an existing state of affairs. Thus it is 
now an easy indeed the easiest course and is therefore of 
much more practical interest and importance than seemed pos- 
sible before 1981. The advantages of this course are clear. It 
would admit the unhampered application by central banks of a 
policy designed to keep their national rate of investment equal 
to their national rate of savings, and so, on Mr. Keynes' theory, 
to maintain a stable internal price-level. In that case we could 
have a practical test of Mr. Keynes' view. 2 (The attractiveness 

1 Mr. Keynes, himself, supports this view. He tells us that nothing short of the 
regulation of the value of new investment by the rate of savings, throughout the 
world, could preserve the world from recurrent crises. The regulations of the 
supply of new gold would, he thinks, keep the long-term trend of prices stable. 
But, then, he admits that the long-term trend of prices is comparatively unim- 
portant. 

" Thus an appropriate regulation of the new supplies of gold would leave us 
still exposed to the full blasts of every credit cycle which blew, unless some 
further mitigating action were taken by the central banks acting in unison and 
with well-directed purpose." A Treatise on Money, Vol. II., page 281. 

And Dr. Hayek is, as usual, even more pessimistic : " It is probably an illusion 
to suppose that we shall ever be able entirely to eliminate industrial fluctuations 
by means of monetary policy. The most we may hope for is that the growing 
information of the public may make it easier for central banks both to follow a 
cautious policy during the upward swing of the cycle, and so to mitigate the 
following depression, and to resist the well-meaning but dangerous proposals to 
fight depression by * a little inflation.* . . . Under existing conditions, to go beyond 
this is out of the question. In any case, it could be attempted only by a central 
monetary authority for the whole world : action on the part of a single country 
would be doomed to disaster." Prices and Production, page 109. 

8 Dr. Hayek is against any attempt on the part of central banks consciously to 
follow such a policy. He would rather they stuck more or less blindly to restriction 
even as he says " in tunes of general depression." This appears to be the result 
of his, no doubt well founded, phobia of inflation due to painful experience of its 
effects in Central Europe during the last ten years. 

Indeed, the conclusion which emerges most strongly of all from a comparison 
of the views of Mr. Keynes and Dr. Hayek is that Mr. Keynes has lived in a 
country which has experienced the ills of capitalist deflation, while Dr. Hayek 
has lived in a country which has suffered the ills of capitalist inflation. It is not 
inexplicable that they make very different practical suggestions from the 
of what appears to be fundamentally the same analysis. 



CAPITALIST CRISIS 127 

of this prospect is, it is true, a little marred in practice by the 
reflection that probably no central bankers [with the possible 
exception of one or two directors of the Bank of England] believe 
in this policy, and that very few indeed of them have ever even 
heard of it.) 

At the moment, however, we are conducting our discussion on 
the assumption that the theory is sound. We are assuming that 
its adoption would, at least, mitigate the severity of crises. 
But even if this assumption were justified, the cost to world 
capitalism of its application would be prohibitively high. This 
cost has been alluded to indirectly when we considered the ad- 
vantages which international trade derived from the use of gold 
as an international means of payment. What would be the con- 
sequences of having no international means of payment ? For 
that is what the permanent and universal abandonment of the 
international gold standard implies. This would be a very 
different matter than for one or more countries temporarily to 
abandon the convertibility of their currencies into gold. For if 
there exists no international standard, money becomes a purely 
national affair ; international money has, in fact, ceased to 
exist. It would be too much to say that the destruction of inter- 
national money would prevent international exchanges alto- 
gether. Certainly, however, it would go very far indeed to break 
up the world market. It might be expected increasingly to re- 
duce international trade to an elaborate kind of barter in which 
delivery of the goods and payment for them must always coin- 
cide in time, if not in place. In 1932, however, this matter is 
only partly one for speculative theory. The gold standard has 
actually broken down over a large section of the globe. What are 
the effects? Writing in 1982, it is too early to appraise more than 
the early symptoms. So far, however, they appear to be exactly 
of the character which we should anticipate. International trade 
is, in fact, rapidly diminishing* And already the question of in- 
ternational barter has been raised. Whether any system of 
barter will actually arise is, of course, much more doubtful. 
After all, although the gold standard is badly tattered it does 
still exist. Half the money of the world is still convertible into 
gold. So long as this is the case, even those currencies which 
have lost convertibility can still be to some extent used as 



128 THE COMING STRUGGLE FOR POWER 

international means of payment. For their value can still be, and 
is, reckoned in terms of the gold currencies. The difficulty is, of 
course, that their value, expressed in gold, changes from day to 
day. This, however, is a serious inconvenience and no more. But 
what if all countries " went off gold " ? Then, indeed, there 
would be no longer any gold currencies in terms of which the 
others could be reckoned. 

Paradoxically enough, I believe that if this happened, gold 
would immediately re-appear as the sole international money. 
For none of the national moneys would have any calculable rela- 
tionship to each other. Thus, the only money which international 
traders could use would be gold. We should have reverted to the 
conditions of the middle ages, when international commerce was 
carried on by means of gold or silver measured by weight as the 
medium of exchange. 1 It is by no means impossible that some- 
thing of this sort may happen. Another possibility is that the 
world will break up into a number of economic areas, each with a 
money of its own. Thus, the British Empire is now widely sug- 
gested by British imperialists as such an area. Other British 
theorists wish to include Scandinavia and the Argentine indeed 
any country which will adopt sterling as the basis of its money, 
France would then, no doubt, make another such closed eco- 
nomic area, America another and so on. The money of each area 
could be based on some quite separate standard. One group of 
powers might be using gold, another silver, a third might experi- 
ment with a tabular standard. And each area would have great 
difficulty in trading with any other except by some form of barter. 

The consequences of such a breakdown of international money 
would be disastrous for world capitalism as a whole. All those 
tendencies towards economic nationalism which, as we ob- 
served, are already so strong, would be enormously reinforced. 
The great states, empires, or groups of states, would move far 
more rapidly than ever towards becoming self-contained monopo- 
listic units. These monopolistic empires would strive towards 

1 Cf. the pound " banco," the instrument by which the bankers of Hamburg 
and Amsterdam effected international payments before the emergence of stable 
currencies. The trader took his silver coins, of no matter what denomination, to 
the bank : they were then weighed and he was credited with so many pounds 
weight of silver. These were pounds " banco " and thus an international i 
of payment was created. 



CAPITALIST CRISIS 129 

economic self-sufficiency. On the other hand, just because 
their foreign trade would be so restricted they would be aggres- 
sive and imperialistic to an unparalleled degree. For it would be 
of paramount importance to them to annex to their areas of 
sovereignty territories providing supplies of important raw 
materials and valuable natural resources. In such a world, 
peace would be a rare exception. And there are few, surely, who 
believe that capitalism can indefinitely survive a recourse to 
major wars. 

The third alternative. The third alternative is to attempt to 
combine the advantages of both the former. The problem is to 
provide an opportunity for experimenting with Mr. Keynes* 
technique for avoiding crises and yet at the same time to pre- 
serve an international means of payment. Nor is it difficult to 
state the conditions upon which alone this problem can be 
solved. There must be established a supernational central bank 
which shall enjoy in respect of existing national central banks 
the same authority as these in their turn now enjoy in respect of 
their own national member banks. Thus, there would be estab- 
lished internationally the same currency system which exists 
nationally to-day. The supernational central bank could vary its 
rate of interest in such a way as to preserve the equality of world 
investment to world savings. At the same time, it would not have 
to fear any outside interference for the simple reason that 
there would be nothing outside of its control. Thus, it is quite 
easy to say how this great reform can be achieved. But, so soon as 
one has done so, it becomes perfectly apparent that it is abso- 
lutely impossible to achieve it at all. For the demand for a super- 
national currency authority is, in fact, nothing more nor less 
than the demand for the world state. It is quite true, of course, 
that the inevitable centralization of authority could be dis- 
guised. It is quite true that there are all sorts of intermediate 
forms and halting-places, represented by National Federations, 
Leagues of Nations and the like ; but the fact remains that in so 
far as an effective supernational financial authority was estab- 
lished, the reality of national sovereignties would be abolished. 
For only by the abolition of national sovereignties can the need 
for an objective international means of payment, such as gold, 
be avoided* It is only by abolishing national sovereignties, by 

IF 



180 THE COMING STRUGGLE FOR POWER 

removing the possibility of national Governments suddenly 
impeding and preventing the flow of international exchanges, 
that periodic settlements of international balances in hard cash 
can be rendered unnecessary. 1 If the world had come under one 
effective sovereignty, then a world Bank money, based on no 
matter what commodity or commodities, would serve. For men 
would feel no more need to settle international balances than 
they now feel to settle internal balances. There would be no 
danger of the interruption of world trade. 

When we have said this, however, we have shown the extreme 
unreality of Mr. Keynes' whole proposal, even on the assump- 
tion that his theoretical argument is sound. For the world is, in 
fact, rushing in exactly the opposite direction. We have already 
considered, in Chapter IV, the whole question of the possi- 
bility of the emergence of a capitalist world state. We saw that 
it was part of the whole question of ultra-imperialism. Thus the 
solution of the question of money ultimately depends, even on 
Mr. Keynes' own showing, upon the possibility of capitalist 
unity. We concluded that, although that possibility could not, 
as a question of pure theory, be denied, yet it was quite clear in 
practice that capitalism was becoming almost daily more hope- 
lessly disunited. Moreover, we saw that the road toward capi- 
talist world unity was not, even in pure theory, the road of 
peaceful federation. The way in which capitalism could just con- 
ceivably secure world unity would be by a series of unparal- 
leled wars from which an ultimate victor empire might emerge. 
The road would lead via Shanghai, not Geneva. In practice, 
however, what would emerge from such a series of imperialist 
wars, if capitalism were to be left unchallenged to wage them, 
would not be a victor empire, with central bankers well versed 
in Mr. Keynes' hopes and Dr. Hayek's doubts, but a new dark 
age of barbarism, hunger and ignorance. The alchemist rather 
than the scientific central banker would be the final inheritor of 
capitalism's attempt to establish a stable money. 

1 " An international money system, or bank, can never function in a nationalist 
world." Sir Arthur Salter. 



V. R. NARLA 

CHAPTEB VII 
Back to the Market ? 

THE last four chapters have been devoted to a description of the 
four major characteristics of present-day capitalism. A chain of 
cause and effect was discovered. We saw that the growth of 
monopolistic tendencies within each state, leads inevitably to 
the growth of a ferocious nationalism in the relations between 
states : and that, in turn, this plague of nationalism prevents 
capitalism from finding solutions to its problems. We con- 
cluded that, in particular, it was this unappeasable rivalry be- 
tween the great states and empires which forbade any attempt 
even at the solution of one of capitalism's most pressing prob- 
lems, namely, the elimination of crises. 

Now these facts are not invisible to the more clear-sighted and 
realistic theorists of capitalism. More especially during moments 
of extreme capitalist crisis, such as the present (1982), the 
capitalist economists see that " things cannot go on like this." 
And all sorts of remedies and reforms are suggested. Nine-tenths 
of these suggestions are not worth even a moment's considera- 
tion, since solutions are arrived at by the simple method of 
assuming away, one or other, or all, of the tendencies in capital- 
ism which have produced the problem. 

There have arisen to-day, however, at least two comparatively 
realistic schools of thought amongst orthodox theorists. For 
both these schools see clearly and face frankly the present crisis 
in capitalism. Both admit that the present situation is impos- 
sible. But each proposes a remedy which appears to be anti- 
thetical to the other's. One school proposes to attempt to restore 
the free market in all its pristine purity : the other proposes to 
hasten forward the process by which the freedom of the market 
is being curtailed. We may, perhaps, call the adherents of the 
school which wishes to re-establish full free market conditions, 
the " market restorers " or the " free traders," using the words 
free trade to mean not merely the absence of international 
tariff barriers but to imply every kind of freedom of exchange. 
The school which wishes further to curtail the market, we may 
call " the national planners." 



183 THE COMING STRUGGLE FOR POWER 

Let us consider first the solutions proposed by the " free 
traders." 1 Now it is clear that the " free traders " are facing 
very great practical difficulties. They avowedly wish to revert to 
a previous condition of affairs. Hence, existing tendencies are 
dead against them. Their theoretical position, however, is 
strong (stronger I shall submit than that of any other capitalist 
school). Let us look for a moment at their aims and at the argu- 
ments which, they claim, show that their policy offers a solution 
for capitalism. 

They diagnose the malady from which capitalism is suffering 
as being due to interferences with free exchange. Hence, they 
believe that the cure is to be found in the abolition of these 
interferences, and the restoration of the nearest possible approxi- 
mation to what the economists caU " a perfect market " (that 
is, a market in which the laws of supply and demand work upon 
price without check) all over the world. They would not claim 
that such perfect market conditions had, in fact, ever existed. 
They admit that the new tendencies to interference with freedom 
of exchange had arisen long before the old restrictions had been 
dissolved. But this is no reason, they feel, why something much 
nearer a perfect world market than has ever before existed, 
should not now be established. For economic science has made 
great strides. In the outside world the market is becoming, it is 
true, less and less perfect ; but in the brains of the economists 
it is becoming more and more perfect. And so the " free traders " 
consider that the time has at length arrived when the perfect 
market can be established. All that is necessary is that the 
statesmen of the world shall listen to the advice of the 
economists. If only they will do so, mankind may be led back 
from the edge of the abyss into a promised land of economic 
progress and stability. Modern economic science, the free traders 
assure us, is now able to offer the complete " blue prints " of a 
world market, not only far superior to anything which survives 
to-day, but much more subtly perfect than was ever dreamt of 
in the philosophy of Mr. Cobden. It is now up to the statesmen 
to begin to construct it, and so to save civilization. 

1 Professor Lionel Bobbins, the vigorous young economist of the London 
School of Economics, holds and preaches the kind of views which I have in mind 
as typical of the " free traders," 



BACK TO THE MARKET? 188 

Modern " equilibrium economics " is indeed an intellectually 
delightful system (intellectually delightful and well rounded, 
just because it is tautologous), and if only the capitalist system, 
which it seeks to explain, does not finally break down in the 
meantime, it will soon reach perfection. " Equilibrium economics, " 
in effect, offers us a picture of a perfectly self-adjusting social 
automaton. If only the compensating motions of this automaton 
are not interfered with in any way, a stable and yet economically 
progressive society will result. The wants of individual con- 
sumers will automatically exercise just sufficient influence, and 
no more, upon " the structure of production " to ensure that 
they are satisfied in the order of their urgency. Fallible human 
reason will be wholely excluded from the task of determining 
to what purposes the limited productive resources of the com- 
munity should be devoted. An infallible mechanism will ensure 
that they shall be invariably devoted to satisfying those wants 
which the members of the community most want to satisfy. 
Exactly the correct amount will be saved and spent. Just that 
proportion of their energies which, it turns out, the citizens of 
the community desire, will be devoted to satisfying their present 
and their future needs respectively. Every part of the mechanism 
will react perfectly on every other. There can never be a serious 
disturbance of equilibrium since a dozen variable " rates," 
each finding its own natural level in a perfect market, will at 
once offset any tendency to disharmony. The long-term rate 
of lending, the short-term rate of interest, the average rate of 
profit attainable in different industries in the same country 
and in different countries at the same time, the price levels of 
different categories of commodities, wage rates, " the money 
rates of the efficiency earnings of the factors of production," 
and a host of other variables, will all move gently and har- 
moniously against each other in order to maintain an ideal and 
perpetual balance. And all that the human beings, who form 
what one might call the connective tissue of the whole machine, 
need do, is each and all to follow exactly their own personal and 
pecuniary interests. Indeed, it is precisely if they attempt, 
impiously, to do more than this that they will disorganize the 
subtle mechanism. Let them strive to respond perfectly and 
automatically to the pull of profit and loss ; let them be but 



184 THE COMING STRUGGLE FOR POWER 

reeds swaying in the winds of the market ; and they will have 
the felicity of knowing, both that they themselves as individuals 
are becoming richer at the maximum possible rate, and that 
society as a whole is becoming " bigger and better " more 
rapidly than it could do under any other conceivable arrange- 
ment. 

Such is " the vision of the market " held up for our admir- 
ation by devout economists. Some of them even go so far as to 
suggest that such a condition of affairs has, in a past " golden 
age " actually existed. Sir Arthur Salter, in Recovery, for 
example, thus lyrically describes the pre-war world. 

u Over the whole range of human effort and human need, 
demand and supply found their adjustments without anyone 
estimating the one or planning the other, ... So supply and 
demand would circle round a central, though moving, point 
of equilibrium tethered to it by an elastic though limited 
attachment. , . . And what changing prices would do for com- 
modities, changing rates of interest would do for capital. 
. . . The economic and financial structure under which we 
have grown up was indeed, at the moment of its greatest 
perfection, more like one of the marvellously intricate 
structures built by the instincts of beavers or ants than the 
deliberately designed and rational works of man." 

(The admission of the unconscious nature of economic life, as a 
whole, under capitalism is worth noting.) Why is it, it may be 
asked, that British economists like Sir Arthur Salter, describe 
with such peculiar enthusiasm the beauties of free exchange ? 
The reason is not difficult to find. When British economists 
hymn the virtues of free trade, they are in truth commemorating 
the days of Britain's industrial and commercial hegemony. 
Sir Arthur Salter writes as if the last century had been a sort of 
commercial Arcadia, in which willing buyer met willing seller, 
each possessing equal bargaining power, neither in a position 
to impose an inequitable contract on the other. Nothing, of 
course, could be further from the truth. The last century was 
the epoch during which Great Britain enjoyed what approached 
a monopoly in the provision of many important goods and 



BACK TO THE MARKET? 185 

services. She could impose almost what conditions she chose 
upon her customers. Moreover, the wealth created by the 
extremely favourable terms of trade, which she did impose, 
enabled her to develop, though not without constant wars, an 
empire which gave her traders a privileged, if not a monopoly, 
position in a large part of the globe. So, in fact, the system which 
British economists find so beautiful was to a large extent one of 
free exchange for everybody else, and of monopoly for Great 
Britain. No wonder they bitterly regret its passing. 

This consideration should be borne in mind throughout the 
contrast which we are drawing between the " free trader " 
school and the main body of British middle-class imperialist 
thought. The kind of free trade which the free trader economists 
dream of returning to, is a free trade in which the scales which 
measure exchanges have been weighted in Great Britain's favour. 
And this should warn us not to push the contrast too far. The 
most ardent British free traders are loyal imperialists. The most 
extreme British imperialists now call themselves Empire Free 
Traders. It is clear that the difference between the two schools is. 
one of methods not ends. Still, the difference exists and is well 
worth analysis, for it reveals the present position of the British 
governing class. 

Sir Arthur Salter's description of the perfect market is typical 
of the views of British free trader economists, and, compared 
to the real world of capitalist catastrophe which we inhabit, his 
description certainly sounds most attractive. It is comprehen- 
sible that the economists, having proved to their own satisfac- 
tion the theoretical possibility of such a system, sincerely believe 
that the best interests of humanity will be served by efforts 
to bring this ideal and perfect market into existence, or, at any 
rate, to return to a state of things in which its most elementary 
and essential conditions are not, as they are to-day, universally 
flouted. For the best of them see and are horrified by the chaos 
and devastation, the stupendous waste of desperately needed 
wealth, which is going on around them to-day. And it is natural 
that they should suppose that all these disasters are a punish** 
ment to the nations which have abandoned the one true 
god the perfect market and have worshipped false economic 
deities. And so they arise like the prophets of old to warn a 



199 THE COMING STRUGGLE FOR POWER 

stiff-necked and hard-hearted generation to return to its forsaken 
faiths. 1 

We will now briefly consider whether a restoration of the 
market is in the abstract desirable. We shall then go on to the 
more practical question of whether it is possible. In a sense it 
is true that the recent disasters of capitalism are the result of 
gross infringements of the market principle. But, these ever 
growing infringements of the principles of free exchange are not 
due to the folly of statesmen, but are the consequence of the 
inevitable emergence of characteristics which were all along 
inherent in the capitalist system. This, however, the economists 
do not believe, for they have for the most part very little in- 
terest in historical considerations. 

Moreover, they cannot conceive of the world without markets. 
They are appalled at the thought of the problems which would 
arise if the market were to be abandoned. They see, quite cor- 
rectly, that the rival school of reformers, the " national plan- 
ners " are weaving schemes which would have consequences 
far beyond anything of which they dream : which would raise 
problems for which the national planners have not the vestige 
of a solution. For it is quite true that the question of the aboli- 
tion of the market raises the most fundamental and far-reaching 
problems that can possibly arise for human society. (We shall 
postpone the discussion of the schemes of the national planners 
until we have finished our consideration of the whole subject of 
the present condition of capitalism. We shall return to them in 
Chapter XII.) 

The free trader economists believe, in effect, that men cannot 
do without the market : that they are not yet old enough and 
wise enough to organize their productive activities without the 
guidance of u consumer preference " without, that is, allowing 
the free choice of the ultimate consumer to determine, by the 
mechanism of the market, what commodities shall be produced. 
Men will make, they suppose, appalling mistakes if they attempt 
to decide in advance what commodities, and what proportions 

1 Marx long ago observed the theological character of much of the thought of 
capitalist economists : " Economists are like theologians for whom there are only 
two kind* of religion. Every religion other than their own is the invention of 
man, whereas their own particular brand of religion is an emanation from God." 
The Misery of Philo^phy. 



BACK TO THE MARKET? 197 

between commodities, shall be produced, without the guidance 
given by the inducement of profit and the corrective of loss, 
which the market alone can provide. Yet this is precisely what 
must be done in any society which is not individualistically 
organized and guided by the " motives of the market." In that 
case, some kind of " Planning Commission " or " Supreme 
Economic Council " or whatever you like to call it, composed 
of fallible human beings, will have to settle what commodities 
shall and shall not be produced in the next year or five years 
or whatever period is chosen. And this is a task which, the 
free trader economists inform us, mankind is simply *' not up 
to." They cite the alleged inefficiency of the economic activi- 
ties which an army carries on : the difficulty of making deci- 
sions : the arbitrary nature of what decisions are arrived at. 
In general, the tasks involved by the conscious organization 
and direction of the gigantic economic process, necessary to the 
life in a modern community, appals them. And even if they do 
not deny, as fifteen years after 1917 they can hardly do, that 
such a task is within the range of human possibility, they be- 
lieve that the quality of organization achieved by conscious 
planning will produce economic results far inferior to those 
possible under a capitalist system. What will turn out in the 
light of future demand to have been the wrong things will, 
they say, be produced : and they will be produced in the wrong 
relative quantities. Then, again, there will be no variety and 
idiosyncrasy about the commodities produced under a planned 
economy. Fashion, charm, gaiety, fantasy, they allege, will be 
banished from life. " We shall all have to wear standardized 
suits." In fact, the free traders allege, any attempt to do with- 
out the market is foredoomed to failure : and, if it did succeed,, 
the results would be unpleasant. Let us rather return, they 
urge, to the guidance of the market. All our misfortunes have 
come upon us because of our infidelities to the great principle 
of free exchange. At all costs, we must get back to it. What- 
ever obstacles stand in the way must be swept aside. Let us 
fight under a banner inscribed with the device " Back to the 
Market." 

Such views may be quite comprehensible on the part of well 
circumstanced economists. Yet, in fact, they represent nothing 



188 THE COMING STRUGGLE FOR POWER 

but a sort of prostration before the market. Mankind must and 
can do without the guidance of the market. It is true that the 
establishment of a planned economy does presuppose a complete 
transformation of the structure of society. Without such a 
social revolution, the economic revolution involved in the aban- 
donment of the market is unthinkable. And after it has taken 
place, men will not at first consciously organize their economic 
activities to the best possible advantage. Mistakes and costly 
mistakes will be made. It may even be that in its early years a 
planned economic system will not utilize the " factors of pro- 
duction " so advantageously as they would be utilized under an 
ideal system of the perfect market, as envisaged by the free trader 
economists. But is this the relevant standard of comparison? 
On the contrary, since the vision of the perfect market remains, 
and always will remain, merely an idea in the heads of the 
economists, the actual comparison which a planned economy 
must bear is with capitalism as it exists to-day. And, on that 
standard of comparison, who in their senses can doubt the im- 
mense superiority of a planned system ? Indeed, when we look 
at the world in 1932, we are tempted to say that no planning 
authority, however foolish, myopic, or even corrupt, could 
achieve quite so grandiose a misdirection and waste of the world's 
productive capacity as is achieved by the present phase of 
capitalism. It is difficult to believe, for example, that any 
planning authority could be engaged in deliberately destroying 
the crops of one half of the world, while the population of the 
other half is dying of starvation. 

It is no doubt true that the great advantage of the planned 
system of a classless society is its ability to satisfy, regularly 
and securely, the basic demands for necessaries on the part of 
the whole population. It might well prove at first inferior to 
even the existing capitalist system in providing an immense 
variety of pleasant but unnecessary articles. And the com- 
fortably circumstanced economists, living for the most part 
in what are still after all the relatively " millionaire " spots on 
the earth's surface, such as Great Britain, America, or France, 
are really much more interested in this latter capacity. What 
they are really doing when they show their remarkable predi- 
lection for the market is, in the abstract, grossly to overestimate 



BACK TO THE MARKET? 189 

the importance of the economic factor in life : while, in actual 
concrete here~and-now fact, they as greatly underestimate it. 
Thus, they tell us that a planned economy must be rejected 
because of its alleged inability to provide the infinite variety of 
commodities which, they say, are necessary to the maintenance 
of civilization. In what sense, we may ask them, is civilization 
dependent upon the mountain of what we can only call knick- 
knacks, some of them pleasant, some aesthetically attractive, 
some useful and convenient, many more of them, however, 
useless and hideous, which form the stock-in-trade of all the 
great commercial areas of the great cities of the capitalist 
world? What would the world lose in civilization if Fifth 
Avenue and Disraeli's famous quadrilateral, bounded by Oxford 
Street, Piccadilly, Regent Street and Park Lane, plus the Rue 
de la Paix, were all taken up and shaken as a woman shakes a 
cloth, until every commodity they contained had fallen out of 
them? And how much would civilization decline if to this 
holocaust of frankly luxury goods were added the contents of 
the great middle-class stores, the stocks in trade of Harrods, 
of Sacks, or Maceys, of the Galeries Lafayette ? The middle 
classes of the west would certainly lose a good deal of comfort. 
But that is about all. (And who knows but that a little loss of 
comfort might not revive to some extent those intellectual 
activities of which that class was at one time undoubtedly 
capable ?) 

In any case, what would be the balance of advantage to 
civilization if the planned economy of a classless society, while 
failing to keep up the variety of such luxuries and conveniences, 
secured, as it undoubtedly could secure, to every single citizen 
of the community an adequate supply of the necessities of life ? 
Of course, the mere psychological gain in the removal of the 
neurosis of anxiety which to-day prevents about two-thirds of 
the population of even the richest communities from ever being 
able to attend whole-heartedly to anything but their daily 
bread, would make possible a quite unparalleled advance in 
civilization. (It is not necessary even to speak of the actual 
physical improvement which adequate food, clothes, and house- 
room would achieve.) When once people know that by working 
a reasonable number of hours they can assure adequate and 



140 THE COMING STRUGGLE FOR POWER 

satisfactory food, housing and clothing for themselves and their 
dependants, the provision of further commodities should become 
a quite secondary social objective. And yet while the free trader 
economists condemn planned economy because it might not, 
at first, be able to provide all the frills of life to which they are 
accustomed, they tolerate and defend a capitalist system which 
is failing utterly to provide the necessaries of life to perhaps 
half the population of the world. In practice, we suddenly 
discover, they seem to attach as little importance to the pro- 
vision of the necessaries of life (to others) as any stoic. In theory, 
they put the maximum possible production of wealth before 
every other consideration. We must, at any cost, restore perfect 
freedom to the market because we can thus, they claim, produce 
wealth faster than in any other way. Yet they defend a system 
which, in practice, produces a state of poverty for 80% of man- 
kind, which would have done credit to Diogenes himself. But 
then the existing market system merely enforces destitution 
upon the mass of the population of the globe. A planned 
economy might neglect to produce the comforts of those, at 
present, well circumstanced. Thus, it is not difficult to account 
for this absurd deification of the market on the part of the 
free trader economists. 

There is nothing absurd, however, about these economists' 
conviction that the only way in which capitalism as they have 
known it can be preserved is to restore, at any rate, some 
approximation to free market conditions. In this contention, 
they are entirely justified. Capitalism is doomed unless it can 
curb and restrain the enormous and now almost universal 
interferences with freedom of exchange, the manifold distortions 
and dislocations of the market, which to-day characterize the 
policy of every important state. For not only would the restora- 
tion of free market conditions be essential to any hope of pre- 
venting the periodic crises of capitalism from becoming more 
and more catastrophic : it would also be the only possible way 
in which a whole series of new wars, in which capitalism is 
certain to perish, could be postponed. It is essential, therefore, 
to consider, not as we have done up till now the relatively 
academic question of the desirability or the reverse of the 
restoration of the market, but the immediate and practical 



BACK TO THE MARKET? 141 

question of whether the market can be, and if so, how it can be, 
restored. 

There are four major reforms, which it will perhaps be agreed, 
must be accomplished if the world free market is to be restored. 

They are : first, the restoration of the normal flow of com- 
modities between countries by the levelling of .tariff barriers 
and the reversal of the whole tendency indicated by the term 
" administrative protection " ; in fact, the establishment of 
world free trade. Second : the break up of the great trusts ; 
the reversal, that is, of the whole tendency towards monopoly 
and towards the fusing of the commercial apparatus with the 
State apparatus of every major nation. In fact, freedom of 
exchange must be restored within, as well as, between states. 
Third : the reversal of the whole tendency towards the estab- 
lishment of social services, giving a new and secure source of 
income to the working class, and to State and trade union 
protection of wage rates. For social services and static wage 
rates are progressively " freezing " one of the most important 
variables of the market into a disastrous immobility. In fact, 
the restoration of the free market in labour must be accomplished. 
Fourth : the establishment of some sort of monetary control 
on a world-wide scale which can attempt, at any rate, the task 
of mitigating commercial crises. In fact, the restoration of the 
stability and continuity of international exchange must be 
accomplished. 

It will scarcely be denied that these are tasks which confront 
any body of men who wish to accomplish the restoration of 
a greater measure of freedom to the market. It is not of course 
necessary that all these tasks need be accomplished in their 
entirety in order that a workable free market may be restored. 
Yet, certainly, substantial progress must be made with each of 
them, if disaster to capitalism is to be averted. Let us, therefore, 
turn our attention to the question of how the market restorers 
propose to effect these reforms. 

In the first place, how are the tariff barriers of the world to be 
levelled, or at any rate diminished ? And who is to do the job ? 
For let us remember that disastrous as tariffs may be to world 
capitalism as a whole they are of enormous benefit to particular 
capitalists. It may be true that " everybody " (that uninspiring 



1 THE COMING STRUGGLE FOR POWER 

abstraction) would be much richer in a free trade world. But 
that does not alter the fact that those very wealthy and in- 
fluential capitalist gentlemen Herr Schmidt of Dusseldorf, Sir 
Algernon Smith of Birmingham, Henry T. Smith of Kttsburg, 
and M. Durand of St. Etienne,;.would all be immensely poorer. 
In other words, the general enrichment which free trade would 
bring could only be achieved at the cost of a gigantic redistribu- 
tion of existing wealth, both between individuals within com- 
munities and between communities as a whole. For not only 
would individual capitalists be ruined, but whole industrial 
areas, which have grown up behind the protection of ever- 
rising tariff walls, would be laid desolate. If the free trader 
economists, or anybody else, are to be given the power to scale 
down tariff barriers, they will be given the power, here, to 
bestow immeasurable wealth, there, to deal destruction and 
ruin. They will be opposed by most powerful and well-organized 
forces, by the organized entrepreneurs of every state, fighting 
a life-and-death struggle for very existence. Certainly this task 
is not a light one. 

Again, let us consider the problems presented by the urgent 
necessity of breaking up the trusts and the other monopolistic 
organizations within the state. Somebody will have to go and 
beard the great monopolists in their dens. Somebody, for in- 
stance, must inform the Morgan partners that they must now 
reveal exactly what companies, banks, private firms and finance 
houses they control both in the United States and in the rest 
of the world, and that they must forthwith dissolve the bonds 
which hold together their unique organization. Somebody must 
have a few words with Mr, Mellon and with the Rockefellers 
on the same subject. In Great Britain, the directors of Unilevers, 
of Imperial Chemical Industries, and of some at any rate of the 
other private trusts must be compelled to dissolve their organiza- 
tions. Of far greater importance, however, both in Britain and 
on the continent of Europe, will be the task of reversing the 
whole tendency to transform the State itself into an association 
of federated and interlocked entrepreneurs and financiers* 
Those fields of production which the State has itself monopolized, 
in Great Britain, as we saw, civil aviation, the distributive side 
of wireless, the long-distance distribution of electric current, 



BACK TO THE MARKET? 148 

cable communications (and in Germany far wider fields of 
production), must be restored to the competition of the market. 
In general, the State must recede into its former position of a 
referee presiding over the competitive struggles of its citizens. 
It must abandon its newly assumed function of attempting 
to bring these competitive citizens into combination : indeed, 
it must reassume as one of its most important duties, the func- 
tion of forbidding future combinations, and dissolving combina- 
tions which already exist. For by pursuing this policy alone can it 
reverse the progressive curtailment of the area of the internal 
free market. 

Thus, in order to attempt the first two reforms, it will be 
necessary to challenge all the most formidable capitalist in- 
terests ; it will be necessary to reverse all the most marked 
tendencies and forces which exist in all capitalist communities 
to-day. A powerful movement of reform, it will be admitted, 
must be mobilized for these two purposes alone. Great leaders 
backed by whole sections of the community acting with the 
utmost determination will be needed. And we have only as yet 
considered half of the measures which we saw to be essential. 
After having challenged every interest in capitalism, the free 
trade restorers of the market must next proceed to take away 
everything which the workers have gained by a century of 
effort. For it is of little use to restore the freedom of the exchange 
of commodities both internationally, and within each nation, 
if trade in one vital commodity, human labour, is to remain 
hedged about by every kind of restriction and restraint. The 
free market cannot function properly, the glittering mechanism 
of the economists' perfect market can never work, unless all 
its interconnected parts are movable. If one of them sticks, 
then naturally the whole machine will jam and ruin itself. Thus 
it is essential that the price of that universally necessary com- 
modity, human labour power, should vary with perfect freedom 
according to the supply of it and the demand for it. Every 
calculation of equilibrium economics is based upon the assump- 
tion that it does so. The price of human labour power, like any 
other commodity, must be made to vary freely with the ratio of 
supply and demand and it must vary to any extent. The only 
limiting factor, and this is no limit for short periods, is the 



144 THE COMING STRUGGLE FOR POWER 

necessity that its price should cover the cost of production. 
And the cost of production of human labour is clearly the cost 
of maintaining the labourer at such a standard of life as will 
enable him successfully to reproduce his kind. Thus, in particular 
the price of labour must be free to fall to this point whenever 
the supply of it exceeds the demand for it. 1 

And yet as everyone knows a hundred provisions have been 
devised to prevent this very thing from occurring. Powerful 
trade unions have to some extent succeeded in creating monop- 
olies in certain types and categories of labour and so in obtaining 
monopoly prices for it. Moreover, the State has itself stepped in 
and, in certain trades, actually fixed artificial minima below 
which wage rates cannot fall, no matter what the conditions 
of the market may be. 

Even more disastrous to the mobility of the price of labour, 
however, has been the tendency of the State to establish the 
so-called u Social Services." These social services consist in 
the provision by the State of income for the labourer additional 
to the income which he derives from the sale of his capacity 
to work. This additional income takes the form of old age 
pensions, payments during sickness, payments to widows, and, 
most serious of all, payments during periods of unemployment. 
Part of all of these forms of income are subsidies paid out of 
general taxation. The effect of these payments in retarding the 
tendency of the price of labour (in ordinary language, of wages) 
to fell to its " natural " level is obvious. The " natural " level 
of wages, whenever the supply of labour exceeds the demand 
for labour, is, as we have said, the cost of maintaining and 
reproducing the labourer. Naturally, both during all commercial 
crises, and in periods of rapid technical progress, when a given 
output of commodities can be maintained with ever less and less 
labour, the supply of labour always will exceed the demand for 
it. At these times, therefore, the price of labour (i.e. the rate of 

1 Sir Arthur Salter gives an excellent illustration of this point. He is writing of 
Britain's return to the gold standard at the old parity in 1925. " In a flexible 
system, an increase in the exchange value of sterling would have transmitted an 
equivalent reduction in terms of sterling throughout the price, wage, and costs 
structure. Only in this way could the change have been effected without loss of 
competitive strength in the world market. But at every stage fixed wages, based 
on wage agreements, and prices held up by semi-monopolistic organizations and 
understanding^ resisted the influence of monetary action." 



BACK TO THE MARKET? 145 

wages) ought always to be falling towards the cost of its produc- 
tion. And it is essential to the mechanism of the market, to its 
power of recuperation from crises, to its ability to minimize 
crises, that it should do so. But if the worker is receiving addi- 
tional income, if in particular he is receiving income when he 
is unemployed, which is itself a sign that this critical condition, 
when the supply of labour has exceeded the demand, has arisen, 
he will be enabled to resist wage reductions. He will stand out 
for the former rates. And his standing out will dislocate the 
whole delicate mechanism of readjustment. 

Hence, it is imperative that all such gross interferences 
with the freedom of the labour market, as Trade Boards, Old 
Age Pensions, Health Insurance, and Unemployment Insurance, 
and the activities of such disastrous " associations in restraint 
of trade " as the Trade Unions, should be abolished, or, at any 
rate, greatly curtailed. Thus, the market restorers must fight 
a head-on engagement with labour as well as with the capitalists. 
Truly, their god is a jealous god, who brooks no rivals in the 
field. 

It might be supposed, of course, that the market restorers 
would, at any rate, have the assistance of all the capitalist 
forces in this crusade for the freedom of the labour market. 
And to some extent, no doubt, this is the case. Not all, even 
of the forces of capitalism, however, would support them. 
Some of the more moderate and sagacious minds in capitalism 
have been, until recently, inclined to maintain and even extend 
the social services, if this was in any way possible. They did 
not share the free traders' enthusiasm for the perfect market 
in labour. They supposed that the growth of the social services, 
the grant, that is, of small doles from the surplus wealth which 
society creates, is in fact the only thing which has hitherto kept 
the workers of the capitalist communities of Europe relatively 
passive in times of crises. And, even now, they feel no stomach 
for a policy which promises them a perfect market at the cost 
of making the workers feel directly and without cover or pro- 
tection, the effects of every breakdown in capitalist stability. 

Finally, since even the most ardent of the market restorers 
cannot suppose that the rest of their programme is practicable 
without a notable increase in the stability of capitalism as a 

KP 



146 THE COMING STRUGGLE FOR POWER 

whole, we come to the last necessity the establishment of some 
sort of world monetary system designed to secure approximate 
stability of trade. 1 

We have already discussed the practicability of this proposal 
and found that in fact it involved nothing less than the demand 
for a world State. The establishment of a world monetary 
authority, that is, invested with powers adequate to attempt the 
task of business stabilization is flatly incompatible with national 
sovereignty. Thus, any attempt to establish it will at once 
run up against the intransigent and ever-increasing jealousies, 
hostilities and fears of the rival empires of the present world. 
For example, the most elementary necessity for such a world 
central bank must be that all states shall entrust theit gold 
reserves to its keeping, and submit to it determining their 
bank rates. Thus, in addition to their tasks of world tariff 
levelling, world trust busting and world trade union smashing, 
the market restorers must induce French bankers and American 
senators to part with their gold reserves and deposit them in 
Geneva, or wherever else is thought convenient. 

We envisage these not inconsiderable tasks, and then we look 
round for the men who are to attempt them. At first sight 
no one seems to be available except perhaps the professors of 
the London School of Economics 2 . Yet the execution of such a 
programme cannot even be attempted unless some powerful 
class, or coalition of classes, is solidly behind the attempt. How 
can the market restorers hope to find such a basis of support ? 
Only by finding a class whose interests would be promoted, 
whose wealth and power would be aggrandized, by the restoration 

1 1 think that Dr. Hayek and probably Mr. D. H. Robertson would say that 
trade rtability would automatically follow from the successful accomplishment 
of the first three restorations, and that accordingly there would be no need for 
world monetary control. They would mean by trade stability, however, that 
capitalist economy would, in such conditions, be so elastic that, while violent 
lumps would occur, a tendency towards recovery would be almost immediate 
and would work very rapidly. Surely, however, they would concede that such a 
system of naked laissez fairt would create revolutionary conditions at once, and 
that some attempt at world monetary control designed to prevent and not to 
cure crises, would be absolutely necessary to capitalist survival ? 

8 No economist who has had the practical experience of world affairs can quite 
bring himself to be a market restorer. Thus Sir Arthur Salter writes : " We cannot 
return to the unregulated competition of the last century ; an unwillingness to 
accept some of the social consequences and the development of modern industrial 
technique together make that impossible." 



BACK TO THE MARKET? 147 

of the market. Does such a class exist? Surely it must, for 
if there were no such class at all the very idea of the restoration 
of the market would hardly have arisen. That class is the remnant 
of the old middle class of small-scale producers for the market. 
Naturally, this now disregarded and diminishing class yearns 
after the days when it was the dominant class in the community. 
Naturally, its members dream of a sort of small bourgeois 
restoration in which all their enemies, the big monopolistic 
capitalists who are crushing them out, the trade unions, which 
are hampering them, the tariff barriers which hem them in, 
the recurrent crises which ruin them in the night, shall all be 
abolished. Nor do their dreams lack verisimilitude. For it is 
from this particular class that many of the ablest theorists and 
economists derive. And they can show that compared with the 
hell which the large-scale imperialistic capitalists are making of 
the world, the reign of their class was, in some ways, compara- 
tively tolerable. 

Observe, however, how pitifully small is the element of genuine 
class support upon which the market restorers can rely. It is 
by no means co-extensive with the whole of the petty bour- 
geoisie. Large elements of quite " small " people, in Great Britain 
especially, are wholely opposed to such a programme. Far from 
being free trade liberals, they are the most violently jingoistic 
of imperialists. They are, in fact, not so much petty bourgeois 
as petty rentiers. They live, that is, not by small-scale inde- 
pendent production, but by enjoying a small participation in 
the profits of great monopolistic imperialist enterprises. This 
category of persons is of enormous importance in the oldest 
and largest of empires, the British Empire. From the retired 
colonel, living on an Indian pension, and the salaried technician 
or accountant in a trust, to the widow with a few shares in the 
Hong Kong and Shanghai Bank, they will all be natural im- 
perialists, tariff reformers and, if they are intellectually active, 
" national planners.'* The free trade market restorers will get 
no help at all from them. Nor can they depend even on all the 
remaining free producers. Those of them whose businesses are, 
in fact, wholly parasitic upon a trust, will naturally acquire the 
outlook of their overlords, usually in a somewhat crude and 
exaggerated form. 



148 THE COMING STRUGGLE FOR POWER 

There is, however, one other and unexpected source of support 
for British market restorers. From over the Channel, hands are 
held out to them. For if we shift our attention from Great 
Britain, Germany and America, from the lands of large-scale 
capitalism, to such countries as Austria and France, we shall 
find that the point of view of the market restorers has a much 
wider basis of support. For example, Dr. Hayek shows in the 
concluding sentences of his book, Prices and Production, from 
which we have already quoted so freely, that he is a market 
restorer. 

" And there is still another and perhaps no less important 
reason why it seems dangerous to me to overstress at the 
present moment the urgency of a change in our monetary 
system ; it is the danger of diverting public attention from 
other and more pressing causes of our difficulties " (page 111). 

And these causes are then, somewhat darkly, indicated. 

** It would be easy to demonstrate by the same type of 
analysis which I have used in the last two lectures that cer- 
tain kinds of State action, by causing a shift in demand from 
producers' goods to consumers' goods, may cause a continued 
shrinking of the capitalist structure of production, and there- 
fore prolonged stagnation. This may be true of increased 
public expenditure in general or of particular forms of taxation 
or particular forms of public expenditure. In such cases, of 
course, no tampering with the monetary system can help. 
Only a radical revision of public policy can provide the 
remedy " (page 111). 

In plain English, what this means is, of course, that the 
real way to get out of the crises is not to tinker with money 
but to stop the excessive demand for consumers' goods caused 
by social services. 

Again, most French economists, notably M. Andr6 Siegfried, 
at any rate when dealing with the problem of other countries, 
are keen market restorers. And this is natural because in fact 
the comparatively backward development of large-scale pro- 
duction in France has still left extant a freedom of exchange 



BACK TO THE MARKET? 149 

unknown in Britain, Germany or America. Thus M, Siegfried's 
remedies for the plight of British capitalism, as expounded in 
his well known-work England's Crisis, are simply those of a 
market restorer. Curiously enough, however, the best individual 
expression of market restoring views has been made by an 
American. Mr. Lawrence Dennis, whose book Is Capitalism 
Doomed? has already been cited, wishes, he implies, to return 
to the America of Washington and Jefferson ; that is, to an 
America of small-scale independent producers for the market* 
He feels that in order to do so, he must stop the farmers from 
borrowing in order to expand and mechanize their farms : must 
apply crushing taxation to big fortunes, in order to prevent 
the large-scale accumulation of capital which makes monopoly 
possible : and he must build a Chinese wall round the Union so 
that neither mass-produced foreign goods shall come in, nor 
American capital go out. 

Now Mr. Dennis is admirably realistic when he is showing the 
fatal contradictions inherent in large-scale capitalism. He is 
especially powerful in his exposure of the rapidity of the present 
drive towards war. 

" The American people have now admitted that they are 
going to do nothing about unemployment. War, therefore, 
is the inevitable solution. It will impose itself by the force 
of economic and political events brought to bear on statesmen 
who do not know what it is all about. The more our statesmen 
talk peace, and the greater their sincerity of belief in what 
they say, the more inevitable becomes the war issue." 

The only alternative which he offers, however, is his pro- 
gramme of a return to modest, small-scale, early capitalist 
methods. And he is most unrealistic in dreaming that the Ameri- 
can people will ever return to such conditions. Indeed, he half 
admits this himself : 

" The criticism of this book is not destructive* Capitalism 
is destroying itself or disintegrating with age. The book 
advances suggestions of moderation and restraint which 
might, if followed and they probably will not be prolong 
and render more pleasant the old age of capitalism. 9 ' 



150 THE COMING STRUGGLE FOR POWER 



All the same, Mr. Dennis has written a far more penetrating 
analysis of the crises than has been achieved by any professional 
capitalist economist. 

We may estimate then that the real amount of support behind 
the market restorers is just about enough to conceive of the idea 
of such a restoration of the market, but is not enough to move 
a single step towards its accomplishment. This in no way 
disproves, however, the arguments by which they demon- 
strate that the only way in which the present capitalist 
system can be preserved is by the restoration of the market. 
Their arguments cannot, in fact, be disproved. They remain 
impeccable. 

We arrive at these conclusions. The free traders are able to 
prove that their solution is the only one ; yet they have not the 
slightest prospect of being able even to attempt to apply it ; 
hence, capitalism cannot in fact be much longer maintained in 
existence. 

It is sad, though it is explicable, and indeed inevitable that 
so much talent should be lavished by these able economists 
on a cause lost these thirty years. Let us erase from our minds 
for a moment all that has been said of the practical impossibility 
of restoring the market. And let us envisage the psychological 
task which would be involved. Let us consider the dying faiths 
which would have to be revived, the worn-out political watch- 
words recoined, the strange outdated weapons of social struggle 
refurbished, if the free trader economists could by some stroke 
of magic have their way. In order that the free market might 
flourish again, that whole system of ideas which reached per- 
haps its highest point in nineteenth-century Britain, and its 
very apogee in nineteenth-century Lancashire, would have to 
be raised from the dead. Out of the Lancashire of to-day, out 
of the now silent mills, out of the empty weaving sheds, the very 
machinery of which has been sold off to Allahabad or to Shanghai, 
would have to emerge, as from the grave, a new generation, 
with the unquestioning faith of their grandfathers in the prin- 
ciples of democracy, the British Parliamentary system, the 
l*rote$tant faith, and a total absorption in self-enrichment as 
a religious duty. Even the ghosts of these ideas do not walk. 



BACK TO THE MARKET? 151 

They are laid for ever. For the epoch of human history and the 
material conditions which alone gave them life have passed 
away down the irreversible stream of time. Only the least 
historically minded men on earth, only English economists, 
could dream of their resurrection. 



PART III 
THE DECAY OF CAPITALIST CULTURE 



CHAPTER VIII 
Religion 

THE capitalist system is dying and cannot be revived. That is 
the conclusion to which any honest investigator of the actual 
facts and possibilities of the present situation must be driven. 

The end of that phase of the history of the peoples of the 
West which began five hundred years ago, carries such enormous 
implications with it that nearly everyone stands too dumb- 
founded to admit what is happening. And even those who do 
admit the fact of finality, are reluctant to realize a tenth of its 
consequences. The gradual and fatal decay of all those societies 
which are based upon the capitalist system of production, and 
the rise of another and alternative way of carrying on life, are 
the two sides of a process, too gigantic to be easily apprehended. 
But we may be assured of one thing : the death of capitalism 
and the substitution of another economic system in its place, 
will leave no single side of life unaltered. Religion, literature, 
art, science, the whole of the human heritage of knowledge will 
be transformed. For no aspect of human life can remain un- 
affected by a change in the way in which human life itself is 
maintained. And the new forms, whether higher or lower, 
which these principal concepts of man's imagination will assume, 
will depend on what new economic system will succeed the 
capitalist system. On the character of this new basis will depend 
whether human knowledge and skill flourish and expand so 
that a new and less miserable, or (if you prefer it) more glorious, 
epoch in human history is made possible, or whether they re- 
lapse and decay, as they have done so many times before, until 
nearly all the little gains which men have so painfully won 
are lost again, and the slow long task of revival from a very 
simple level of life has to be begun again. 

We shall discuss below the question of what form of economic 
organization will succeed present-day capitalism. The question 
of whether it is to be an improvement, or the reverse, has still 
to be decided. It is the destiny of the men of l^b twentieth 
century to decide this very question. But it is, ftfcany case, 
certain that the whole structure of that civilization, Which has 



156 THE COMING STRUGGLE FOR POWER 

been built up upon capitalist production, is crumbling. For that 
^structure that " culture," as the Germans would call it was 
adapted to an age of individualism and " freedom " alone. And 
the age of individualistic freedom is very nearly over. 

We are told to say nothing but good concerning the dead, and 
it would be foolish to say nothing but ill of the dying. It is true 
that the age of individualistic freedom has been for the vast 
majority of mankind merely a mockery of its own name. But 
so long as we clearly recognise that this epoch is over and that 
efforts to revive it are utterly futile, we should be foolish to 
deny the achievements of the culture of the capitalist period. 
Certainly this was a stage through which mankind had to pass. 
Lenin says that capitalism is hell compared to socialism, but 
heaven compared to feudalism. And his testimony is weighty ; 
for he was one of the very few men who have ever lived under 
all three systems. The Russia of his youth was at least semi- 
feudal, the Western Europe of his years of exile saw the long 
rich afternoon of capitalism, and the last seven years of his life 
were spent in the labour of clearing the ground for the founda- 
tions of the first considerable attempt at the establishment of 
socialism. And no doubt Lenin was right. Feudalism sounds 
comparatively pleasant to Western Europeans across the gap 
of five hundred years. But, compared to it, even capitalism did 
mean the emancipation of, at any rate, one class of mankind. 
The European middle class was enabled to rise and to build 
up what has been, on the whole, the most brilliant, if by no 
means the most stable, civilization that the world has as yet 
known. It is undoubtedly true that the cause of individualistic 
freedom is to-day the cause of everything that is reactionary, 
stupid, barbaric and repressive in the world, and that it can 
only triumph by destroying civilization and pulling us back into - 
an age of darkness. But that does not mean that it was not in 
the past the best cause for which men at that stage in human 
development could fight. The achievements of the age of in- 
dividual freedom were real enough. Moreover, it would be es- 
pecially foolish for a British writer to deny the function of the 
capitalist system in laying down that material basis which can 
alone make higher achievements possible. For undoubtedly 
Great Britain played a leading part in " the fight for freedom/* 



RELIGION 157 

That fight was, of course, only the fight for the free market, 
the struggle for the right to buy and sell ; the struggle, in the 
final analysis, for the right to exploit. All the same it was a 
fight that had to be won. Victory in it marked a stage in the 
history of man. The wiser part for a British writer is not to 
deny the achievements of the capitalist epoch but, in recognizing 
unhesitatingly that that epoch is over, to hope that his country- 
men will play an equally important part in the struggle to achieve 
a new and higher form of society in the new epoch which is 
visibly and inevitably upon us. Unfortunately, an appallingly 
large number of even the best intelligences are not to-day en- 
gaged in the task of burying the vast and slowly expiring body 
of capitalist culture. They are taking no part in the essential 
work of clearing the ground for the new order. Unfortunately, 
the great majority of western intellectuals are engaged in the 
useless and indeed pernicious task of trying to carry on a little 
longer the culture of capitalism. And yet one might have sup- 
posed that there was ample warning to be had from the desperate 
condition of every extant system of ideas ; warning enough from 
the present state of religion, philosophy, art, literature and 
science, that it was impossible under the existing social system 
to prevent a progressive decay from invading every one of these 
fields of intellectual activity. 

The systems of ideas with which men strive to comprehend 
the world are, it will scarcely be denied, dependent upon the 
society which gave them birth. And the health and vitality of 
these concepts and ideas are essential to the health of that 
society. For although the economic activities by which men keep 
alive must be the foundation of any society, they are only the 
foundation. And men do not live on foundations alone. There is 
no need to deny the importance of the social edifice simply 
because we have at length discovered what its foundations are 
made of. And if a dry rot, starting quite explicably in those 
foundations, spreads, as it must, to the whole great structure 
of civilization, if it lends the odour of decay even to the highest 
pinnacles of thought, to the philosophical, religious, aesthetic 
and scientific concepts which crown the whole building, then cer- 
tainly the decay of these higher parts will be scarcely less fatal 
to the building than was the original decay of the foundations. 



158 THE COMING STRUGGLE FOR POWER 

The decadence of the ideas of a given system of society can, 
and do, themselves react on the economic basis. Once the 
process of change has begun, action is reciprocal. When the 
movement is upwards, when the society is expanding, the grow- 
ing wealth and vigour of the basic economy makes possible 
ever new achievements in the fields of ideas : and these theoretical 
and psychological achievements themselves, by freeing the 
human mind from prejudices and fears, make possible a new 
expansion in the economic base. On the downward slope, the 
process is the same. Not only does decay transmit itself from 
the shrinking economy to the structure of ideas above it, but 
the weakening grip of these now enfeebled ideas over the hearts 
and minds of men make them decreasingly capable of maintain- 
ing and preserving even that contracted economic basis which 
still remains to them. Action, both of growth and of decay, is 
reciprocal between the economic foundation and the ideal 
structure. 

In these pages, there has been submitted a demonstration 
that the capitalist system has now far passed its meridian and 
is dropping steeply and irretrievably into the shadows. If this 
diagnosis is justified, we should expect to find not only those 
symptoms of economic disorder and contraction which we have 
already discussed, but a parallel decline in the vitality and 
creativeness of the systems of ideas to which capitalist society 
gave birth. 

Now a characteristic system of ideas, religious, philosophic, 
aesthetic and scientific, has been the contribution to human 
civilization of the capitalist classes of the Western world. It is, 
however, a commonplace of even the capitalist theorists them- 
selves that in every one of these fields the existing system of 
ideas is being held together with great and ever-increasing diffi- 
culty : even though overt collapse is averted, the hold of these 
ideal systems over men's minds becomes continually weaker. 

Hence, for the purposes of our estimate of the position and 
prospects of the extant social order, it is necessary to attempt 
some examination of present conditions and tendencies in the 
field of ideas. 

Hitherto the supreme expression of the spirit of every epoch 
of human history has been the religion which the men of that 



RELIGION 159 

epoch have succeeded in evolving. 1 In the major historical*epochs 
great religious systems have been established. By a marvellously 
elaborate and, at the height of the given epoch, a marvellously 
satisfying arrangement of symbolic acts, closely associated with 
an equally elaborate and satisfying mythology, it has been pos- 
sible to express the contemporary interpretation of man's place 
in the universe. And men have been able to express themselves 
by means of this religious method with a thousand times greater 
force and richness of content than they would have achieved, 
if they had attempted to express themselves intellectually. In 
every age and place, men have rightly concluded that their 
religion was the central feature of their civilization. They knew 
that it represented the richest expression which they all col- 
lectively, and generation by generation, had been capable of 
giving to the fundamental assumptions of their civilization. 

Such assumptions, such prerequisites, of civilization have 
hitherto contained two main strains of feeling. On the one hand, 
men have imperatively required some assurance that they are 
not altogether helpless and alone in the face of the gigantic 
and perilous indifference of the natural forces which sur- 
round them. Such assurance religion supplied by personifying 
these forces so that, at least, they might be invoked, cajoled 
and propitiated. On the other hand, it was imperative to the 
stability of the human communities of the past that the strongest 
possible prohibitions should be placed upon some of men's 
strongest instincts. This need religion also supplied, by provid- 
ing that these very natural forces of which men were princip- 
ally afraid should, in their personified form, as the gods, or as 
God, forbid the " anti-social " acts. Thus, a sanction far more 
awful than any that could be provided by a human tribunal 
was secured for the tabus necessary to the main forms of civiliza- 
tion, which have hitherto existed. For it was necessary to con- 
vince the great majority of men, by means of a partly conscious 
act of deception on the part of their rulers that they would 
in their own persons be certainly, dreadfully, and eternally 
punished, if they committed acts which tended to make the 
then existing type of community life impossible. 

> Hence, as Marx says, " The criticism of religion is the beginning of all 
criticism." 



1*0 THE COMING STRUGGLE FOR POWER 

Of these religious expressions of the characteristics of the 
human communities of the past, the Christian religion has been 
one of the greatest. Above all, it has been one of the most flexible. 
The same elements of mythology, even the same symbolic acts, 
have been capable of wide adaptations. Different versions of 
Christianity have served the religious needs of the various forms 
of society which have existed in Europe, and latterly, in America, 
during the last 2,000 years. Moreover, widely different forms of 
the religion have been used by different classes existing simul- 
taneously in time and place within the same society. 

Roman Catholicism has been the predominant version of 
the religion during most of the 2,000 years of its currency. 
Catholicism, however, has not been the expression of Christianity 
especially suitable to the capitalist form of society evolved by 
the Western world. On the contrary, it is an historical common- 
place, which we repeated in Chapter I., that the middle class in 
its first great battle for the freedom of the market found its 
major opponent in the Catholic Church. It is characteristic, 
however, of the flexibility of Christianity that, although its 
established form was the arch enemy of the new form of society, 
which a changing technique of production was making necessary, 
yet the very authors of this new society fought under the banner 
of a new variety of the old religion. The middle class of Europe 
in their long struggle showed no signs of inventing a new religion 
for themselves. 1 The men of the market found that a new form 
of Christianity, namely Protestantism, served their purpose 
very well. Indeed, as Marx points out, this form of Christianity 
" with its cult of the abstract human being " 2 is an ideal religion 
for a society based upon private property. With capitalism, 
Protestant Christianity flourished. For it was the Protestant 
virtues which were at once the product and the support of the 
capitalist system. Thrift, self-denial, self-reliance, sobriety, in- 
dustriousness these virtues built alike the Protestant Churches 
and the railway system of the world. Accordingly, it is significant 

1 Robespierre's Goddess of Reason and, at a later stage, the Positivism of 
Comte are a very illustrative kind of exception. They showed, by being con- 
ceived of at all, the theoretical possibility of a new special religion for the trium- 
phant middle class, and by their complete failure, the practical redundancy of 
any such new religion. 

Vol. I., page 58. 



RELIGION 161 

that it is precisely this final form of Christianity, that it is Pro- 
testantism in all its sub-varieties, which is to-day in the most 
rapid and obvious decline. 

Nor did the rise of capitalism affect the fortunes of Christianity 
by creating the Protestant schism alone. With the very first 
appearance of merchant capital in the thirteenth century, the 
character of Catholicism itself began to change, and has been 
changing ever since. With the rise of the merchant guilds, of 
the individual merchants, and later, of the merchant bankers 
(to use a modern term), Catholicism itself became, under the 
influence of the Franciscan movement, a personal and not, as 
it had been before, an essentially communal religion. When the 
individual, as trader and producer, instead of as formerly, the 
feudal association, became the basic unit of society, religion had 
to become the religion of that individual's salvation. This " Pro- 
testantization " of the Catholic Church, if we may be permitted 
the paradox, culminated in the seventeenth and eighteenth cen- 
turies with the Jansenist movement, and the heyday of mer- 
chant, as distinct from industrial, capital. 

Since then, and this is of especial interest, the Catholic Church 
has been getting more Catholic again. After the low-water 
mark of Catholic power at the end of the eighteenth century, 
Catholicism has recovered ground, if only relatively to the other 
Churches, both in intellectual prestige and in temporal power. 
And this, of course, is just what we should expect. For life, 
with the growth of large-scale production, is becoming less and 
less individual and more and more communal again. Thus, for 
anyone who can achieve religious belief at all, the Catholic 
form of Christianity is becoming increasingly appropriate. 
To-day, the point has been reached where a highly intellectual 
neo-Catholic, and significantly, neo-Thomist, movement is 
evidently reaching back for the pre-Franciscan, predominantly 
communal form of the faith. 

The present crisis in religious belief goes far deeper, however, 
than the decay or revival of any of the sub-divisions of Christi- 
anity. A religion, it has been suggested, is the supreme collec- 
tive] expression of a community's view of man's place in the 
universe. And yet, by a crucial paradox, it is essential to the 
existence of any religion that its adherents should not consciously 

LP 



162 THE COMING STRUGGLE FOR POWER 

realize that this is the function of their faith. If they did so, 
they would inevitably attempt an intellectual instead of a 
symbolic and mythological statement of their philosophy of 
life. For the very fact that they had become capable of stand- 
ing critically outside of their religion and of realizing what 
in fact its function was, would mean that they were ready for 
explicit and rational statement : it would mean that they 
had ceased to believe. And straightforward belief in the literal 
and overt truth of what a religion teaches about the nature of 
the universe, and not any esoteric recognition of the ser- 
vices which it is performing to the community, is what keeps 
a religion alive. 

This straightforward belief in the essential claim of all 
varieties of religion to be supernatural, has become extremely 
difficult for men to-day. In that melancholy book, The Future 
of an Illusion, Dr. Freud, himself one of the last great theorists 
of the European capitalist class, has stated with simple clarity 
the impossibility of religious belief for the educated man of 
to-day. The traditional claims of religious dogma are, he tells 
us, three in number. 

" They [the dogmas of religion] deserve to be believed : 
firstly, because our primal ancestors already believed them; 
secondly, because we possess proofs, which have been handed 
down to us from this very period of antiquity ; and thirdly, 
because it is forbidden to raise the question of their authen- 
ticity at all." 

Dr. Freud then examines these claims. 

" This third point cannot but rouse our strongest sus- 
picions. Such a prohibition can surely have only one motive : 
that society knows very well the uncertain basis of the claim 
it makes for its religious doctrines. If it were otherwise, the 
relevant material would certainly be placed most readily at 
the disposal of anyone who wished to gain conviction for 
himself. And so we proceed to test the other two arguments 
with a feeling of mistrust not easily allayed. We ought to 



RELIGION 168 

believe because our forefathers believed. But these ancestors 
of ours were far more ignorant than we ; they believed in 
things we could not possibly accept to-day ; so the possibility 
occurs that religious doctrines may also be in this category. 
The proofs they have bequeathed to us are deposited in writ- 
ings that themselves bear every trace of being untrustworthy. 
They are full of contradictions, revisions, and interpolations ; 
where they speak of actual authentic proofs they are them- 
selves of doubtful authenticity. It does not help much if 
divine revelation is asserted to be the origin of their text 
or only of their content, for this assertion is itself already 
a part of those doctrines whose authenticity is to be examined, 
and no statement can bear its own proof. 

" Thus we arrive at the singular conclusion that just what 
might be of the greatest significance for us in our cultural 
system, the information which should solve for us the riddles 
of the universe and reconcile us to the troubles of life, that 
just this has the weakest possible claim to authenticity. We 
should not be able to bring ourselves to accept anything of 
as little concern to us as the fact that whales bear young 
instead of laying eggs, if it were not capable of better proof 
than this." 

It is on account of these simple considerations that what we 
have called straightforward religious belief becomes ever more 
impossible to-day. But, it may be objected, is not this a very 
naive form of religious belief ? Have not intelligent men always 
believed in religion on quite other grounds ? Have they not 
always privately known that their belief was pragmatic not 
evidential : that it was the essential service which religion 
could perform to society which made it worthy of their ad- 
herence, and not its literal truth? Dr. Freud examines this 
question also. 

" The second attempt is that of the philosophy of * As 
If. 9 It explains that in our mental activity we assume all 
manner of things, the groundlessness, indeed the absurdity, 
of which we fully realize. They are called ' fictions,' but 
from a variety of practical motives we are led to behave * as 



14 THE COMING STRUGGLE FOR POWER 

if * we believed in these fictions. This, it is argued, is the case 
with religious doctrines on account of their unequalled 
importance for the maintenance of human society. This 
argument is not far removed from the Credo quia absurdum. 
But I think that the claim of the philosophy of 'As If is 
such as only a philosopher would make. The man whose think- 
ing is not influenced by the wiles of philosophy will never 
be able to accept it ; with the confession of absurdity, of 
illogicality, there is no more to be said as far as he is con- 
cerned. He cannot be expected to forgo the guarantee he 
demands for all his usual activities just in the matter of 
his most important interests. I am reminded of one of my 
children who was distinguished at an early age by a peculiarly 
marked sense of reality. When the children were told a fairy 
tale, to which they listened with rapt attention, he would 
come forward and ask : Is that a true story ? Having been 
told that it was not, he would turn away with an air of dis- 
dain. It is to be expected that men will soon behave in like 
manner towards the religious fairy tales, despite the advocacy 
of the philosophy of * As If.' " 

Thus beyond doubt, and beyond recall, the possibility of 
religious belief is leaving Western man. But what does this mean? 
It means that man is at length alone with the universe. He is 
at last free to face those natural forces which are so unbearably 
careless of his fate. He can no longer pretend, as he used in his 
childhood, that these natural forces can be made, if suitably 
invoked, to co-operate with him. Nor can he now, as he did in 
his youth, invoke the aid of a celestial and omnipotent ally to 
fight on his side against the stars. At last, he is old enough to 
bear the thought that upon himself alone depends the issue of 
the struggle between life and death. For he has at length thought 
this fatal thought and so he must bear it. 

The ebb of religious belief brings man face to face with his 
environment ; but it also brings him face to face with the neces- 
sity of remodelling that environment. For unmodified by man, 
the world is intolerable. It must be recreated, if not in fancy 
by the comforts of religion, then in fact by the hand of man 
himself. Fortunately, by the inevitable intertwinings of historical 



RELIGION 160 

cause and effect, that very growth of knowledge which has 
robbed man of his protective cloak of religious illusion, gives 
him in compensation the power to refashion the earth. It is 
precisely because man is at last in sight of being able to control 
nature himself that he now can neither maintain, nor should he 
need, the illusion that nature is controlled by God. 

If this were all, all would be well. The illusions of childhood 
would be slipping from man, not a moment before he was able 
to dispense with them. But now we come on an astonishing 
paradox. It might seem that once he had achieved technical 
mastery over nature, as he has so largely done, man would 
have nothing more to fear. There would be nothing left un- 
known, incomprehensible and so uncontrollable, to impose the 
arbitrary and terrifying hand of necessity upon him. As he 
became every day more sure of his technical powers, he would 
become in exact measure more free, more fearless and less in 
need of ghostly comforts. Man would have grown up. His life 
would be within his own control, free from his long serfdom 
to his environment. And this, indeed, is the vision of a millen- 
nium which has floated before the eyes of some of the noblest 
thinkers of mankind. It is a vision which has been seen for the 
last 200 years ; ever since, that is, it became clear that man was 
winning his struggle with nature. It was this vision which in- 
spired the great eighteenth-century French rationalists ; which 
sustained the somehow much less estimable English liberals 
of the nineteenth century (less estimable because they were 
already beginning to be able to know better) ; and which flickers 
on, even to-day, in the minds of such belated prophets of the 
capitalist class as Mr. H. G. Wells. 

To-day, however, one would have supposed that the naivety 
of the vision would have been apparent to everybody. Man's 
conquest of nature is already far advanced. But where is the 
millennium ? It is almost out of sight. In practice the technical 
progress of man, his machines, his science, his general command 
over nature, far from having created a universe sufficiently 
habitable for him to dispense with the consolations of religious 
illusion, have left him almost, if not quite, as miserable and 
terrified as ever. The knowledge which he has acquired has in- 
deed made religious belief almost impossible. But the application 



166 THE COMING STRUGGLE FOR POWER 

of that knowledge has not as yet made a world in which the need 
for that consolation is much if any the less urgent. The promises 
of the scientists and the rationalists seem to have been all 
false. Man has, at their bidding, eaten of the tree of knowledge 
and so conquered his environment. And yet, in some mysterious 
and incomprehensible way, nature remains as cruel, arbitrary 
and terrifying as ever. Man now knows how to grow his food 
with one-tenth of the labour that he used before. And yet, 
inexplicably, he remains as hungry as ever. He can clothe, 
warm and shelter himself with one hundred times the ease he 
could. Yet he remains almost as naked, cold and ill-housed as 
before. No wonder that a profound sense of disappointment 
and discouragement pervades the Western world. No wonder 
that in spite of the intellectual suicide involved, an increasing 
number of men turn away from science and reason, and seek 
again in desperation to believe in the consoling myths of the 
childhood of the race. 

How can this tragic paradox have arisen? How can man 
have gained the knowledge which makes illusion impossible, 
and which should make it unnecessary, and yet find himself 
still in as great a need of it as ever ? Surely, the answer to the 
riddle is not obscure ? We have said that man has progressed a 
good way in the conquest of his environment. But were we 
right ? Truly, he has learnt how to control the forces of nature 
quite sufficiently to enable him, if he would, to make his life 
incomparably more secure, less arduous, longer, healthier, more 
civilized in every respect, than it has ever been hitherto. But does 
this conquest of nature in fact constitute a victory over his 
environment as a whole ? Does nature in fact constitute the 
whole of man's environment ? Is man himself something apart 
from nature, something contraposed to it by antithesis ? Cer- 
tainly, he is not. Man is himself a part of nature, a part of his 
own environment. For each man, all other men, all of humanity, 
are part of his external environment. And man's conquest of 
the whole of his environment necessarily involves man's self- 
conquest. In other words, the comprehension and so control of 
his fellow-men must be a part of any control over his environ- 
ment as a whole. Man, before he can achieve anything substan- 
tial, must learn to control not only nature but also the social 



RELIGION 16T 

organizations, the relationships between man and man, which 
are necessary to his control over nature. 

It is no longer difficult to understand how the present pitiful 
condition of man in the capitalist world has come about. Man 
has subdued nature. But he lives in the most abject servility 
to the social organization, the various associations with his 
fellows, which he has been led to make in order to accomplish 
his conquest of nature. He has learnt how to control the pro- 
duction of almost anything he desires. But he is obviously and 
shamefully controlled by the means of production. He is acquir- 
ing a clear and rational understanding of his relationship to 
nature. Therefore he has that relationship under his control* 
But he does not and cannot comprehend his relationship to 
other men, to society as a whole. Hence he cannot control that 
relationship ; on the contrary, it unmercifully controls him, 
forcing him to starve miserably in the midst of the plenty he 
has created. While his relationship with nature is bathed in the 
clear light of science, his social relationships, his relationships 
to his fellow-men, are still shrouded in obscurity and mysti- 
fication. Man, in a word, has not really conquered his environ- 
ment at all. He has only conquered the non-human part of his 
environment. He is still, in the main, as ignorant as any terrified 
savage of the nature of his relationship with his fellow-men. 
And not until he makes this second conquest : not until he has 
understood the nature of his relationship to his fellow-men and 
has acted on that understanding, will he be able so to refashion 
life that he will be able to do without the comforting illusions 
of religious belief. 1 

In fact, what has been accomplished by science is largely to 

1 Lenin perfectly expresses this point in an article in the newspaper Proletarii, 
written in 1909 : " In modern capitalist countries the basis of religion is primarily 
social. The roots of modern religion are deeply embedded in the social oppression 
of the working masses, and in their apparently complete helplessness before the 
blind forces of capitalism, which every day and every hour cause a thousand 
times more horrible suffering and torture for ordinary working folk than are 
caused by exceptional events such as war, earthquakes, etc. ' Fear created the 
gods. 4 Fear of the blind force of capital blind because its action cannot be 
Foreseen by the masses a force which at every step in life threatens the worker 
and the small business man with * sudden,* * unexpected, 9 ' accidental ' destruction 
and ruin, bringing in their train beggary, pauperism, prostitution, and deaths 
from starvation this is THE tap-root of modern religion which, first of all, and 
above all, the materialist must keep in mind, if he does not wish to remain stuck 
for ever in the infant school of materialism.'* 



168 THE COMING STRUGGLE FOR POWER 

remove the need for what we have called the first strand of feeling 
expressed by a religious system ; but it has failed to remove the 
need for the second strand. Men need no longer fear nature as 
they did before. But they need to fear their fellow-men as much 
as ever. Thus the second function of religion, which was to give 
a supernatural sanction to the prohibition of anti-social acts> 
seems to be as much needed as ever. 

What, however, are anti-social acts ? If men have not yet 
discovered, or at any rate recognized, any science which will 
give them an understanding of the nature of society, how can 
they know what acts are indeed incompatible with society itself, 
with any form of civilization, and what are merely incompatible 
with the form of society under which they happen to live? 
May it not turn out, on closer investigation, that the awful 
sanctions of religion are really being used to restrain the great 
majority of men from committing acts of rebellion against the 
particular form of society under which they live ? May not many 
of what Dr. Freud calls the " instinctual privations " of men be, 
not the inevitable price of civilization, but the price of a civiliza- 
tion which solves the problems of organization for production 
by creating two opposed classes in society ? 

Dr. Freud, in some passages, seems to recognize this. 

He writes : 

" If we turn to those restrictions that only apply to certain 
classes of society, we encounter a state of things which is 
glaringly obvious and has always been recognized. It is to 
be expected that the neglected classes will grudge the favoured 
ones their privileges and that they will do everything in their 
power to rid themselves of their own surplus of privation. 
Where this is not possible a lasting measure of discontent 
will obtain within this culture, and this may lead to dangerous 
outbreaks. But if a culture has not got beyond the stage in 
which the satisfaction of one group of its members necessarily 
involves the suppression of another, perhaps the majority 
and this is the case in all modern cultures it is intelligible 
that these suppressed classes should develop an intense 
hostility to the culture ; a culture, whose existence they make 
possible by their labour, but in whose resources they have 



RELIGION 109 

too small a share. In such conditions one must not expect 
to find an internalization of the cultural prohibitions 
among the suppressed classes ; indeed they are not even 
prepared to acknowledge these prohibitions, intent, as they 
are, on the destruction of the culture itself and perhaps 
even of the assumptions on which it rests. These classes are 
so manifestly hostile to culture that on that account the more 
latent hostility of the better provided social strata has been 
overlooked. It need not be said that a culture which leaves 
unsatisfied and drives to rebelliousness so large a number of 
its members neither has a prospect of continued existence, 
nor deserves it " (The Future of an Illusion). 

If we may turn his own weapons of analysis against him, may 
we not observe that the form in which Dr. Freud pays his tribute 
of recognition to the inherent instability of class society is highly 
significant ? " It need not be said," he writes. But surely this 
particular sentence in which he actually says that a class society 
neither can nor should survive is just what does need to be said. 
It needs to be said all the more because Dr. Freud seems, once 
he has put these words on to paper, to forget all about them for 
the rest of his argument. He shows no further recognition of 
the fact that certainly the great majority and, for all we know 
to the contrary, all of the "instinctual privations " of man would 
be evitable in a classless society. And this is all the more strange 
in that Dr. Freud comes to the conclusion that the experiment 
of educating a generation of men free from belief in the illusions 
of religion both must be tried, and may produce startingly good 
results. For he attaches the utmost importance to the damage 
which is done to, what he calls, " the radiant intelligence of a 
healthy child " by instilling into the child's mind the intellect- 
ually untenable dogmas of religion. Indeed, he goes so far as to 
suggest that it is largely this which accounts for the relative 
degeneration to " the feeble mentality of the average adult.*' 

But is this not exactly what Marx said, somewhat more 
forcibly, when he called religion " the opium of the people " ? 
Dr. Freud considers that if this intellectual damage is not done 
to children, they may well remain sufficiently intelligent to 
fight the battle of life without needing the illusions of religion. 



170 THE COMING STRUGGLE FOR POWER 

It is not difficult to agree with him. But would not these in- 
telligent adults use their mental powers to acquire an under- 
standing of the social relationships which to-day so painfully 
constrict the lives of the great majority of them ? And is it not 
precisely the fear that this would happen which makes the 
present rulers of the world so insistent on the need for the 
maintenance of religious belief ? It is because he does not even 
ask these questions that Dr. Freud remains, for all his great 
intellectual powers, the last major thinker of the European 
capitalist class, unable to step outside of his class limitations. 

The nature of these social relationships has been the subject 
of these pages. The key to their understanding is, of course, 
that they are all, by derivation, productive relationships. 1 
That is to say, men find themselves associating with each other 
in social arrangements to facilitate the production of the things 
they need. And consequently the forms which these associations 
take will vary and alter as the methods which they use for 
production vary and alter. 

But until men understand this, and until they begin to act 
on this understanding, their social life will remain wrapped in 
impenetrable mystery. Being mysterious, it will be uncontroll- 
able, and being uncontrollable, it will continue to play havoc 
with their lives. Men's forms of association, which are to-day 
companies, trusts, banks, trade unions, states and empires, will 
continue as they do now, not so much to further the productive 
purposes for which they have evolved as to thwart and render 
useless the marvellous new methods of production which men 

1 It is possible that some of the earliest social relationships were not productive 
(i.e. economic) but sexual in origin. Certain anthropological, and indeed zoological, 
researches (for these relationships were in fact mostly pre-human) seem to 
indicate this. But these researches also indicate that these pre-human and semi- 
human relationships were tenuous precisely because they were not productive. 
Again, Professor Malinowski's vivid descriptions of social relationships amongst 
comparatively developed communities such as the Trobrianders show how 
important is the sexual strand in the human connections of these islanders. 
But they also show that these sexual relationships are themselves closely bound 
up with economic factors, viz. customary gifts of great value at marriage, etc. 
There seems to be no conflict at all between the results of these researches and 
the contention that the predominant social relationships in all modern communities 
in the last 8,000 years in Europe, let us say, have been in fact relationships for 
the purposes of production, and that, consequently, these social relationships 
must and do vary with the methods of production. At bottom, of course, the 
economic and the sexual impulse are not separable. The impulse to maintain life 
if the same as the impulse to produce life. Production implies reproduction. 



RELIGION 1T1 

have come to possess. And so long as this remains, so men will 
need, perhaps more desperately than ever, the religious con- 
solations which their new knowledge has made almost unattain- 
able. Marx has a sentence which, published nearly seventy years 
ago, gives us a key to the whole condition of discouragement 
which pervades the capitalist world to-day : " Such religious 
reflections of the real world will not disappear until the relations 
between human beings in their practical everyday life have 
assumed the aspect of perfectly intelligible and reasonable 
relations as between man and man, and as between man and 
nature/' 1 The relations between man and nature are now be- 
coming every day more " perfectly intelligible and reasonable " : 
the social and political relations between man and man in society 
remain, in the capitalist world, almost as mysterious as they were 
when Marx wrote in 1867. And so long as these vital relation- 
ships remain in obscurity men will attempt, even if vainly, or 
even at the cost of all intellectual integrity, to regain the com- 
forts of religion. 

Marx says elsewhere that " the demand that one reject illu- 
sions about one's situation, is a demand that one reject a situa- 
tion which has need of illusions." Man's situation, which under 
capitalism is now growing worse and not better, has, therefore, 
more and not less need of that greatest, dearest and most com- 
fortable of all illusions : the illusion of religion. Only by a 
realization of the need to do away finally with the capitalist 
form of society, which to-day forbids the creation of the new 
civilization which has become attainable; only by the destruction 
of that worn-out set of social relationships which are year 
by year thrusting us all back into chaos and barbarism, can 
the need for illusion be removed. The passage quoted from 
Capital continues : " The life process of society, this meaning 
the material process of production, will not lose its veil of 
mystery until it becomes a process carried on by a free associa- 
tion of producers, under their conscious and purposive control." 
When that has been accomplished, man will not, to be sure, have 
immediately solved all his problems. His situation in the uni- 
verse will still be daunting enough. Human life will remain for 

1 Capital, page 54 of Eden and Cedar Paul* s translation. 



179 THE COMING STRUGGLE FOR POWER 

a long time a hasty and precarious affair. The conquest by com- 
prehension of man's relationship to man, when it has been added 
to the conquest of man over nature, will not automatically 
usher in any impossible millennium of universal happiness. It 
would be childlike to believe any such thing. But it will make 
possible a whole new era of civilization, an era based upon the 
full use of man's ever-growing power and knowledge ; a civiliza- 
tion far richer, because a civilization which will embrace whole 
communities and not merely certain classes within communi- 
ties, than any we have yet known. 1 

1 This is the answer to make to such nihilistic pessimism as Dr. Freud has 
expressed in his other semi-sociological work Civilization and its Discontents. He 
finds that the burden of sustaining, by the repression of anti-social instincts, the 
weight of the existing form of civilization is becoming ever more intolerable to 
men. And is this to be wondered at, since the overwhelming majority of men 
draw little and ever-decreasing benefits and carry an ever heavier weight ? It is 
not encouraging for the worker rigorously to repress his private pugnacity in 
order, as a reward, to fight and die in an imperialist war : to curb the egotism of 
his unconscious in order to make possible a community life from which he draws 
only a grotesquely unequal share of the benefits. To-day the vast majority of men 
have almost all of the burden and very little of the civilization. Is it then o 
remarkable that Dr. Freud finds that the weight is becoming intolerable ? 



CHAPTER IX 
Science 

AN explanation has been offered both of the decay of religious 
belief and of the painful consequences, so long as capitalism 
endures, of that decay. This is no place (nor have I the equip- 
ment) to consider that somewhat equivocal sphere of human 
thought, philosophy. Philosophy seems to have been, on the 
whole, a kind of grandiose attempt on the part of men for whom 
what we have called straightforward religious belief had become 
impossible, to spin out of their own heads a satisfying substitute 
for faith. Such an attempt marked, however, a stride forward in 
the liberation of the human intelligence. It marked the point 
at which it had become necessary for the leading minds of the 
race to attempt an explanation of the universe by intellectual 
methods. For although it is only now that the amount and the 
diffusion of scientific knowledge has made religious belief almost 
impossible to wide sections of men, there have long been indivi- 
duals who have found it impossible to accept the credentials of 
any of the divine revelations. 

Philosophy sets out to be the critique of human knowledge 
as a whole : the science of the sciences. That school of historically 
minded philosophers which culminated in Hegel, approached, 
I take it, the realization of this high claim, and then drew back 
in terror. 

No other philosophers, however, have ventured so far. And 
to-day a large part of official academic philosophy is in full 
retreat from the attempt to use the intellect in order to compre- 
hend the universe, and is engaged in no other task than the 
reintroduction of theological methods. The present tendency is 
to " reconcile science and religion " : to attempt, that is, not to 
comprehend science, but to prove that science can " really " tell 
us nothing about life. But science can tell us this at any rate, it 
can tell us how to change life. And it does not seem unreason- 
able to suppose that understanding a thing and changing it are 
interdependent acts. If, as we have suggested above, it is im- 
possible to change life until we have begun to understand it, it 
is also impossible to understand life unless part of our effort to 



1T4 THE COMING STRUGGLE FOR POWER 

understand it is also and at the same time an effort to change it. 
(This after all is simply the method of everyday common sense. 
If, to use a homely illustration, any of us really want to under* 
stand, say, the carburetter of a motor-car we take it to pieces, 
put it together again, at the same time looking at the handbook 
to see if there is anything wrong with it, and if so, putting it 
right.) It is also, of course, the experimental method of science. 
The manipulation of an object must be a part of a successful 
attempt to understand it. 1 

Until philosophy adopts this, the characteristic outlook of 
healthy science, it will remain, however brilliant and subtle its 
practitioners may be, half buried in a mediaeval scholasticism. 
Some idealistic philosophers, it is true, claim to be able to change 
the world by means of their moral exhortation. Indeed, as they 
believe that " the idea " is the basis of " the thing," and not the 
thing of the idea, moral exhortation leading to a " change of 
heart " on the part of all men, is the only dynamic method open 
to them. All that we need say as to this claim is that experience 
has shown, after a trial of some 3,000 years, that it is unjustified* 
Naturally, however, as long as philosophy continues to exist 
in the world of capitalist decline, it cannot possibly adopt the 
outlook of healthy science. On the contrary, it will continue to 
become, as it is doing to-day, less and less scientific, extrovert, 
objective and vigorous, and more and more theological, intro- 
vert, subjective and impotent. 

What, however, is the effect of the decline of capitalism on 
science itself ? Does science alone manage to remain immune ? 
Now science was once the favourite son of capitalism, its 
supreme intellectual achievement. The growth of scientific 
knowledge alone enabled capitalism to make its dramatic 
achievements in the conquest of nature. Each time that capi- 
talism encountered some obstacle to its development, science 
was called in to solve the problem. Had the opening up of new 
markets far outstripped the possibilities of production, science 
could be relied upon to, and did, double production by new 

1 '* The philosophers have merely interpreted the world in various ways : the 
thing is to change it." Eleventh Thesis on Feuerbach, Marx. 

44 The problem of the cognition of the external world is an integral part of the 
problem of its transformation. The problem of theory is a practical problem.*' 
Theory and Practice from the Standpoint of Dialectical Materialism, Bukhara. 



SCIENCE 175 

methods. Were the means of transport inadequate to distribute 
the products of an improved industrial technique? Science 
found new methods of transport and distribution. Were the 
possibilities of profitable investment at a given level of indus- 
trialization in a given place reaching exhaustion ? Science pro- 
duced inventions which made it profitable to scrap whole cate- 
gories of productive equipment and to replace them by new 
machines. Did the demand for labour tend to exceed the supply 
and thus enable the worker to command better wages ? Science 
produced automatic machinery, by which an increased level of 
production could be maintained by perhaps two-thirds of the 
former amount of labour. Nor were the capitalists ungrateful. 
We can catch a glimpse of their former attitude to science in 
the works of Dr. Ure, that delightfully naive rhapsodist of the 
rising industrial system. In his magnum opus. The Philosophy of 
Manufactures, published almost a hundred years ago (1885), 
Dr. Ure tells us again and again of the gratitude which is due to 
the scientists, both for reducing the demand for labour, and for 
" disciplining " what labour might still be necessary. Thus, he 
tells us, that " the constant aim and the tendency of every im- 
provement in machinery is, in fact, to do away entirely with the 
labour of man, or to lessen its price by substituting the labour 
of women and children for that of grown men, or of unskilled 
for that of skilled workmen." Again, there is nothing like a good 
dose of science for overcoming recalcitrance on the part of 
workers in accepting the terms of employment offered. Thus, 
the benefits conferred on humanity by the invention of the self- 
acting mule are described by Dr. Ure as follows : the mule, he 
says, is " a creation destined to restore order among the indus- 
trial classes. This invention confirmed the great doctrine already 
propounded, that when capital enlists science into her service, 
the refractory hand of labour will always be taught docility." 1 
Is it strange that in the hot youth of an expanding capitalism, 
science was a best beloved son ? 

Now, as we have seen, capitalism has exhausted the possi- 
bilities of its development. It has reached an economic impasse 

1 For the changes that have taken place in capitalist views on science, Professor 
Hesaen's brilliant paper, " The Social and Economic Roots of Newton's * Prin- 
cipia ' " (published in Science at the Cross Roads), should be consulted. See, also, 
for Dr. Ure and his school of thought, the first volume of Capital. 



1W THE COMING STRUGGLE FOR POWER 

and cannot use the enormous capacities for production which 
science has already given it. Still less does it know what to do 
with the ever new and more fabulous powers which science is 
pressing into its hand. May we not expect some change in the 
attitude of the capitalist class to science ? We may expect it in 
theory, and we can discern it in fact. Science has now definitely 
ceased to be the admirable genie which, produced from its lamp 
at the correct moment, can solve every problem. The capitalists 
find themselves rather in the embarrassing position of the 
sorcerer's apprentice. To-day, when they call on science to solve 
their problems of production, they get more than they ask for. 
What, for example, is a harried capitalist who cannot sell, say, 
10,000 tons of steel a year, to say to the scientists who can tell 
him how to produce 100,000 tons ? What thanks will the agricul- 
tural expert, who can double the yield of wheat, get from the 
farmer who has just gone bankrupt because he has grown too 
much of it ? It is only natural that the modern capitalist is com- 
ing to have a new view of his scientific assistants. A decided 
coldness is developing. The capitalist's father may have been all 
on the side of Huxley in his famous controversy with the bishops. 
But the son, when he looks around him at the dangerous chaos 
of the world to-day, is apt to think that the conservatism of the 
ecclesiastics had a good deal to be said for it. 

An excellent example of this coldness towards science is 
afforded by a speech which that able, and always up-to-date, 
spokesman of French capitalism, M. Caillaux, delivered in 
London on the World Crisis on February 29th, 1932. M. Caillaux 
said : 

" At the present time an urgent task is to stop this war of 
technical appliances, but it, too, is a difficult problem. First 
of all I must destroy any illusions you may have. It is purely 
chimerical to imagine that time will cure all and that pro- 
ducers themselves will moderate the application of scientific 
discoveries to industry ; even if they wished to, they could not 
do this. We must realize that the authorities must be called 
upon to intervene. Employers, financiers, and merchants will 
have to be compelled to co-operate in the home markets of 
their own countries and later beyond their frontiers, to get 



SCIENCE 17T 

together to adapt production to consumption, to co-ordinate 
their forces, to unite, to rationalize, if this barbarism is pre- 
ferred, their technical appliances. But this must be carried 
out in such a manner that individual enterprise, which will 
always be the great motive force in human progress, does not 
become less, in such a manner that the public authorities do 
not exceed the scope of the only part which is theirs to play, 
that of encouraging and controlling." 

How fiercely M. Caillaux demands that scientific advance 
should be " moderated " ! He is even prepared, for this destruc- 
tive purpose alone, to see an intervention of the State in econ- 
omic affairs. But he realizes that he is here on dangerous ground. 
Was he not after all delivering the fourth annual " Richard 
Cobden Lecture " ? Once the State has compelled producers to 
arrest technical progress, it must step back and allow " indi- 
vidual enterprise " to act once more as the " motive force of 
human progress." To such intellectual depths are even the more 
talented spokesmen of capitalism reduced, by their efforts to 
solve the insoluble problems which their system presents to them. 

And this new coldness on the part of capital towards science 
is a very serious matter for the latter. The scientists are, for the 
most part, rather simple minded fellows outside of their labora- 
tories. Ever since the days of Dr. Ure and his friends, they have 
gone ahead with their researches in the confident assurance that 
they were conferring inestimable benefits upon mankind. But 
now it appears that, on the contrary, all they are doing is to 
make chaos worse confounded. In a world already half smo- 
thered in commodities which it cannot distribute or consume, 
they are discovering how to double the production of new com- 
modities. In a world where thirty or forty million men and 
women are condemned to the agony of unemployment, they are 
discovering how to dispense with half of those who are still 
employed. 

No wonder that they get no more panegyrics. On the con- 
trary, doubt and hesitation has, if we may judge from the 
columns of the most responsible British scientific organ, from 
the columns of Nature itself, spread even to the scientists them- 
selves. For example, under the somewhat ambiguous title of 

MP 



178 THE COMING STRUGGLE FOR POWER 

" Unemployment and Hope," Nature writes : " There is, indeed, 
in the present situation much to excuse a passing reflection that 
perhaps, after all, the people of Erewhon were wiser than our- 
selves in destroying their machines, lest, as Marx predicted, 
the machines reversed the original relation and the workmen 
became the tool and appanage of a lifeless mechanism." 1 This 
is indeed a new note ! Where now are the dithyrambs of a lire, 
the thundering hosannas of a Huxley ? Nature, moreover, follows 
up the argument with some practical proposals. Not content with 
a " passing reflection " that the application of every principle 
for which it has stood since its foundation has proved disastrous, 
Nature begins to make some concrete suggestions for undoing its 
own work. The writer continues as follows : 

" The aims of industry are, or should be, chiefly two : 
(1) to furnish a field for . . . growth of character ; and (2) to 
produce commodities to satisfy man's varied wants, mostly of 
a material kind, though of course there are large exceptions 
outside the material category, and the term ' material ' is 
here used in no derogatory sense. Attention has hitherto 
been directed mainly to (2), and the primary aim of in- 
dustry has been ignored. Such a one-sided view of industry 
coupled with a too narrow use of the much-abused word 
4 evolution ' . . . has led to over-concentration on quantity 
and mass production and a ridiculous neglect of the human 
element, and there can be no doubt that had a little thought 
been given to the first aim then the second would have been 
much more completely and satisfactorily attained ; also un- 
employment would not have been heard of. . . ." a 

All this means (although one must admit to an element of 
guesswork in interpreting the passage), that all our efforts to 
produce commodities with the minimum expenditure of human 
energy have been a mistake. What is really wanted is a type of 

1 Marx, of course, said just the opposite. He said that, under capitalism, the 
workmen had become the tools and appanages of machines, but he predicted 
that, under communism, the position would be reversed and the machines become 
the tools and appanages of the workmen. 

* The apology, in a scientific journal, for such an indelicate suggestion as that 
man has material wants which, after all, may sometimes need auttle attention, 
is particularly charming. 



SCIENCE 1T9 

production which will produce a correct frame of mind in the 
worker (will " furnish," that is, " a field for growth of 
character "). 

We are next informed that in future the aim of science must 
not be, as heretofore, to achieve large-scale efficient production. 
The new aim is to be, " elasticity." And elasticity is then de- 
fined as follows : 

" Elasticity further means the possibility of reviving, under 
new and improved forms to meet modern conditions, two at 
least of the older types of industry which are supposed to 
have been superseded or rendered obsolete by modern large- 
scale production, namely : (1) small cottage industries or 
handicrafts ; ... (2) a combination of manufacturing with 
agricultural or garden industry. . . . Industry still has its roots 
firmly and deeply rooted in the past, and foolishly to tear up 
a great part of those roots as old and useless is the surest way 
to weaken the industrial tree. Perchance the source of the 
unemployment curse is to be found here. 

" The restitution of these two principles of an older in- 
dustrial order, so essentially and characteristically English, 
under improved forms made possible by modern scientific 
achievement, including notably electrical power distribution, 
would furnish, in the first place, a new and almost infinite field 
for human employment of all kinds, absorbing all or most of 
the present unemployed." 

This passage, at any rate, is clear. What is wanted is to go back 
to pre-industrial methods of production. Scrap your huge-scale 
factories : prohibit mass production by law : and return to 
" small-scale cottage industries, or handicrafts," with a little 
gardening thrown in. (It is true that the use of electrical power is 
suggested for the cottage industries. But this is obviously a mis- 
take. For clearly much more employment will be given if all 
forms of mechanization are prohibited.) Samuel Butler certainly 
never foresaw that, within thirty years of his death, those pro- 
posals for universal machine-wrecking, which he put forward 
as a literary fantasia, would be seriously advocated as a prac- 
tical solution for the problems of the day by the leading organ of 



180 THE COMING STRUGGLE FOR POWER 

British science. How much that last phrase about these revived 
handicrafts furnishing " a new and almost infinite field for 
human employment " would have delighted Butler's restless 
irony. He might have written to Nature to enquire why its 
leader writer stopped short in his beneficial proposal. Why 
should handicrafts be permitted ? Why should specialized tools, 
such as hammers, saws, spades, forks, planes, awls, and the like, 
all displacing an immense amount of labour, be allowed ? Why 
not return at any rate to the level of the technique of, say, the 
older stone age ? Then the leader writer could drop that weak 
word " almost " and boldly write that he had discovered a 
method for furnishing an " infinite field for human employment." 

The state of mind of the author of " Unemployment and 
Hope " is, no doubt, an extreme example of the intellectual 
catastrophe which has overtaken some of the spokesmen of 
modern science. But it is none the less deeply symptomatic of 
the growing loss of self-esteem and self-confidence which they 
are feeling and which they must continue progressively to feel 
in the capitalist world. What has happened is undeniable, for its 
consequences cannot be escaped. The existing system of society 
has ceased to be suitable for the extant methods of production ; 
for the general level of technique which science has achieved. 
There are only two things to do about it. Either the system of 
society must be changed, and a form of society adopted which 
is compatible with modern science ; or, conversely, modern 
science must be destroyed, or, at any rate, artificially put back 
to, and kept at, a point where it will again be compatible with 
capitalist society. When faced with this choice the author of 
44 Unemployment and Hope " has no hesitations. The hope 
which he brings to the unemployed is the hope of the destruction 
of science. If he has to choose between capitalism and science, he 
chooses capitalism every time. For he is a spokesman of the 
capitalist class, long before he is a scientist. 

It is naturally in the field of the applied sciences that we 
should expect to find the first symptoms of discouragement. 
For the applications of scientific advance increasingly dislocate 
the social system. Thus I understand that in a recent meeting of 
the chief association of American Civil Engineers certainly 
the most powerful, and hitherto the most self-confident body of 



SCIENCE 181 

scientific technicians in the world a proposal was lengthily 
discussed in a private session, that the only real contribution 
which engineers could make to the economic problem was to 
close the United States Patent Office for a hundred years. 
Again, examples of the suppression of new devices and inventions 
by vested interests which would be adversely affected by their 
application could, of course, be given in very great numbers. 
Indeed, many inventors have now become, in effect, licensed 
blackmailers of the trusts. They do not dream, having perfected a 
device, of putting it on the market. On the contrary, they take it 
to the existing trust, certain that they will be " bought off " for 
a good round sum. This, however, is a hackneyed theme. Mr. 
Bernard Shaw summarized the matter neatly in his play The 
Apple Cart, in which he described the great firm of Breakages 
Ltd., which undertakes all the repair work of the nation and 
suppresses all the devices for making commodities unbreakable. 
At the same time, it is not merely in the applied sciences that 
symptoms of faint-heartedness begin to appear. Many eminent 
physicists now make a regular practice of, and in some cases a 
regular income by, excursions into idealistic philosophy. Again, 
it is natural that official scientific bodies should show particularly 
marked signs of intellectual reaction. For example, the British 
Association, with a perfect appreciation of the trend of the 
times, chose as its annual President in its centenary year (1931) 
General Smuts. It is not until we come to enumerate the qualifi- 
cations of this well-known soldier that a full realization of the 
adequacy of this choice is realized. In the first place, General 
Smuts is a General. Thus the martial application of so many of 
the recent triumphs of chemistry and mechanics is emphasized. 
In the second place, General Smuts has become a great im- 
perialist with iingeccable views on the fundamental inferiority 
of " native " races. Thus a tribute is paid to the impartiality of 
modern anthropology. Thirdly, General Smuts is a philosopher, 
and moreover an idealistic philosopher, whose doctrine of 
" Holism " lays down that everything is one indivisible whole, 
incapable of analysis, and therefore not susceptible of scientific 
investigation. Thus, the graceful admission of the science of 
modern capitalism that it cannot " really " tell us anything 
about anything is recognized. And fourthly, of course, General 



182 THE COMEtfG STRUGGLE FOR POWER 

Smuts is a statesman, whose historic achievement it was to 
insert into the Treaty of Versailles those stipulations which set 
the amount payable in reparations by Germany at an order of 
magnitude hitherto more familiar to astronomers than econo- 
mists. Thus, the assistance which scientific conceptions can now 
render to the art of politics is recognized. 

All the symptoms of doubt and hesitation, which are growing 
up in the minds of scientists, should not, however, in themselves 
induce us to expect any immediate slowing up of the advance of 
scientific knowledge. Science is, increasingly, not merely a sub- 
jective process which goes on inside the heads of scientists, and 
is dependent upon their state of mind ; it is an objective large- 
scale semi-industrial activity which, once it has been started, 
acquires a very great momentum of its own. The recent ad- 
vances in the fields of chemistry and physics, in particular, 
depend to a great extent upon the actual laboratories and equip- 
ment provided, the endowments received and the number of re- 
search workers trained in the universities. Thus, we must expect 
a very considerable lag between a change in the attitude of the 
governing class towards science, or in the self-confidence of 
scientists themselves, and any falling off in the rate of scien- 
tific progress. In fact, the decade immediately after the Great 
War, 1918-1928, was a period of quite unprecedented scientific 
advance. It is true that this decade was on the whole one of 
capitalist recovery. And it is not without interest to observe the 
extremely close correspondence which now exists, not only be- 
tween science and industry as a whole, but between particular 
sciences and particular industries. The unparalleled progress of 
physics during the last fifteen years has been quite demonstrably 
dependent upon the rise of the electrical industry. For the 
great electrical firms, such as the American General Electric 
Company, the Phillips Lamp Company (lately employing some 
forty professors directly), the British Metropolitan Vickers and 
the German electrical trusts, have provided practically all of 
the large sums of money which are needed for modern physical 
research. They have both maintained large laboratories them- 
selves and have also made substantial grants to universities for 
physical work. 

Nor is it difficult to discover the basis of the other great 



SCIENCE 188 

scientific success of recent times : the advance of biology. The 
money for this work has come, partly from imperialist Govern- 
ments, and partly from the great corporations such as the 
British trust, Unilever's, which are vitally concerned in opening 
up tropical areas. There has been nothing in the least accidental 
about recent scientific progress. It has been closely correlated 
with the fortunes of capitalist industry. Where capitalism has 
prospered, science has progressed. If even these sections of 
capitalist enterprise cease to make progress, we may expect a 
corresponding stagnation in science. 

For the post-war recovery of capitalism was a very relative 
recovery ; it was extremely patchy ; while some industries, 
such as the electrical industry, went ahead, others were stagnant 
or regressive. It is not surprising that symptoms of psychological 
decay in the attitude of mind of scientists were apparent before 
the end of this decade. Even now, however, the rate of scientific 
advance has hardly, if at all, abated. We should expect the 
effect of the changed attitude of the governing class to make 
itself felt in the end, indeed, by the gradual drying up of the 
funds provided for scientific work : and we should expect the 
subjective degeneration of scientists gradually to begin to affect 
the quality of their work. (And this latter consequence, in con- 
trast to the former one, would presumably show itself first 
in the failure to advance any further the most abstract and 
theoretical concepts of science. Many observers do claim that 
this is already occurring in the form of a " crisis " in the basis 
of mathematical thought.) 

Both these factors will take effect over the decades rather 
than over the years, however. In the meantime, too, there are 
counterbalancing factors. Even though modern capitalism 
finds science an embarrassment rather than a help in the field 
of production, modern imperialism has still has indeed increas- 
ingly a need for science. The progressive banishrngnt^of com- 
petition from the field of commercial rivalry 
companies, and its reappearance in the 
or rather inter-imperial rivalry, while 
the application of science, creates anot 
Thus, at any rate to those branches off 
crease the power of the state in war (ar 




184 THE COMING STRUGGLE FOR POWER 

governing classes of the great empires will still be liberal. 
Altogether, therefore, we may say that while science is most 
vitally affected by the fact that capitalism has reached an 
impasse, yet there is no reason to suppose on that account that 
there will be an immediate slowing up in its rate of advance. 

Yet for the moment at any rate, we may expect such a retarda- 
tion : and that for a very concrete and objective reason. The 
present capitalist crisis has gone so far that the actual funds 
available for many forms of scientific work are drying up. 
Modern scientific research in many of its aspects is a costly 
affair and it can only be carried on in the capitalist world by 
the trusts and corporations and by the State itself. Both the 
trusts and their States are to-day feeling the pinch very badly 
and the actual basis of scientific work is narrowing. Thousands 
of scientific workers are themselves becoming unemployed. 

Disquiet is growing in the minds of many young scientists : 
they are beginning to show a new interest in political and 
economic questions. Their necessarily specialized training seems, 
however, to have an only limited application to these questions. 
Their approach is, for the most part, unhistorical. Hence, there 
seems to be a danger that the energy and enthusiasm of the 
younger scientists, who are genuinely in revolt against the uses 
to which their work is at present being put, will be dissipated in 
impracticable schemes. Some of them, for example, talk of 
inducing all scientists to refuse to do work which can be used 
for war purposes. Apart from the technical difficulty of finding 
much scientific work which could not be so used, it should surely 
be apparent that there is not the slightest hope of inducing 
scientists as a whole to take up such an attitude. Most scientists 
have exactly the same political outlook as that of other profes- 
sional men and they are, as the last war showed, quite as suscept- 
ible to patriotic appeals. They are caught within the net of 
existing social relationships just as much as lawyers, doctors 
or civil servants. There is not the slightest possibility of them 
taking up an independent revolutionary role. What is possible 
is for individual scientists to realize the incompatibility of 
capitalism and science, and to throw in their lot with the forces 
of the working class as some of the most distinguished of the 
older Russian scientists have done. To do so involves, however, 



SCIENCE 185 

a recognition of the overriding strength of historical forces which 
it seems particularly difficult for scientists to make. Most of 
them prefer to take up the much easier attitude that politics 
are all nonsense ; that science is the only reality. (Mr. J. B. S. 
Haldane, for example, has often expressed this view.) They 
appear to suppose that science exists in a sort of vacuum 
unaffected by the social struggles of the present epoch. Truly, 
we may confidently rely on coming events rather than on argu- 
ment to shatter this delusion. But, unfortunately, it will then 
be too late for such genuinely well-intentioned scientists to 
make their contribution to the working class cause. Only a 
serious study of history and economics could convince them 
that the working class is the only objective force which can 
possibly avert the destruction of civilization and science in the 
wars of imperialism. And very few scientists see the need for 
such a study. 

Again, the very forms under which modern scientific work is 
organized are well designed to shut off scientists from contact 
with the outside world. The grouping of scientists around uni- 
versities, without any contact at all with productive industry, 
is clearly a relic of the literary tradition of learning. In another 
sense, however, scientists are brought into close touch with 
reality : they are forced to consider the fact that the principal 
way in which they can earn an income to-day is to obtain one 
of the university appointments which are open to them. As 
their confidence in science as a benefactress of the human race 
is undermined by the frustrations of capitalism, they are more 
and more tempted to subside into not uncomfortable academic 
chairs. 

Thus it is inevitable that many scientists, when they realize 
the incompatibility of the present social system and even 
the present achievements of science, will, like the author of 
" Unemployment and Hope," humbly conclude that the social 
system is perfectly in the right, and that the applications of 
science must at once be restricted in order to conform to the 
exigencies of capitalism. Some, however, may come to the con- 
clusion that another remedy is to adapt the social system to the 
advance of science. For some scientists may, when they have 
to choose, prefer science to capitalism. 



CHAPTER X 
Literature. I 

IT is not, however, in the enfeeblement of belief, alike in religion 
and in science (for the victor in that once famous contest has 
not long survived the vanquished), that we shall find the most 
sensitive reflection in the world of ideas of the impasse which 
confronts capitalism to-day. We shall look for it rather in that 
wide and ambiguous tract of human thought which is called 
literature. " Literature " is perhaps the most remarkable of 
all the ideal constructions which the human mind has begotten. 
It is a great sea into which for centuries have been poured all 
those thoughts, dreams, fantasies, concepts, ascertained facts, 
and emotions, which did not fit into any other of the categories 
of human thought. Into literature have gone philosophical 
ideas too tenuous for the philosophers, dreams too literal for 
plastic expression, ascertained facts too uncorrelated for science, 
and emotions too intertwined with the particular instance to 
find expression in the glorious and precise abstractions of 
music. 

While the other arts, music, painting, sculpture, are the 
algebra of emotional expression, literature is the arithmetic. 
Music and the plastic arts seek to express the generalized essence 
of man's predicament in the universe. Literature, for the most 
part, attempts to illuminate some particular predicament of a 
particular man or a particular woman at a given time and place. 
Literature is something of everything : its borders march on 
one side with science, on another with music, on a third with the 
plastic arts ; and they touch the kingdom of religion itself. 
For the purposes of these pages, we shall take the widest possible 
definition of literature and include in our discussion the works 
of a novelist turned historian, Mr. H. G. Wells, of an economist 
turned social critic, Mr. Keynes, and of a poet philosopher, 
Nietzsche. To take this very wide view of literature is, after all, 
only to accept literature's traditional claims. Traditionally, the 
boundaries of literature were coterminous with those of human 
knowledge itself. Up till the sixteenth century, the poets felt 
that there was nothing on earth or in heaven which their art 



LITERATURE 187 

could not comprehend or express. When Bacon said that he had 
" taken all knowledge as his province," he did not, we may be 
sure, feel that he had overstepped the boundaries of literature. 

What we are concerned with is to mark the reactions of some 
of the major writers of present-day capitalism to the social and 
economic conditions which surround them. For these writers 
are certainly amongst the most gifted and sensitive men of their 
time, and what they feel and express cannot fail to tell us a good 
deal about the state of the society in which they live. Let us 
examine first of all the work of three contemporary social 
theorists. If we deal first with the social theorists, that is not 
because more can be learnt about the condition of a society 
from those of its writers who consciously criticize its char- 
acteristics, than from those writers who, fondly, believe that 
they are writing " pure literature." It is arguable that we may 
learn more from the unconsciously assumed attitudes of the 
" pure " writers. All the same, let us begin by considering such 
a writer as Mr. Wells, in order that we may not be obliged to 
push out at the very beginning of our investigation on to the 
uncharted, and unchartable, sea of " pure " literature. We shall 
undertake that voyage in the next chapter. 

Mr. Wells has shown himself, more especially in the work 
which he has done in the last five years, to be the heir of a long 
and important tradition. By the publication of his three Out- 
lines of history, of science, and of economics, respectively 
he has shown himself to be a modern encyclopaedist. He is the 
last of that long line of the theorists of the capitalist class which 
stretches back in Great Britain, through Herbert Spencer, 
through the younger Mill, through Godwin, to Locke and 
Hobbes ; and which in France springs from the encyclopaedists 
and physiocrats, from Condorcet, Montesquieu, Quesnay, Con- 
dillac, d'Alembert, Helvetius, Holbach, Diderot and Voltaire 
himself. And if it seems somehow odd to compare Mr. Wells to 
these venerable figures, that is the consequence of his environ- 
ment rather than of any lack of talent in the man himself. 

Mr. Wells' own recent development in self-consciousness has 
been significant. It is curious to remember, for example, that 
until the last decade Mr. Wells used to consider that he was a 
socialist. As, however, the real nature of the issue between 



188 THE COMING STRUGGLE FOR POWER 

capitalism and socialism has become inescapably clear, Mr. Wells 
has at length realized where he stands. He has grasped the fact 
that he heartily dislikes communism, socialism or any form of 
working class collectivism. His major works, in fact, mark the 
close of the exactly antithetical tradition : they are the vale of 
English liberalism. It was the touchstone of communism in 
practice of the Russian Revolution which enabled Mr. Wells 
thus to find himself. About 1921, he went to Russia, interviewed 
Lenin and Trotsky, came home to compose his diatribe against 
Marxism in The World of William Clissold, and discovered that 
salvation lay in the beneficent trustifications of big business. 
He became, though he does not seem to have been quite con- 
scious of this, or ever to have read his Kautsky or Hilferding, 
an ardent disciple of the school of ultra-imperialism : of the 
world state to be achieved by the coagulation of the capitalist 
classes of all nations. 

And it is not really Mr. Wells' fault if he has in consequence 
become involved in the most extreme contradictions. For the 
contradictions were inherent in the situation of capitalism, and 
could not be avoided by anyone who sought a capitalist solu- 
tion. The basic contradiction in Mr. Wells' attitude, from which 
all the others flow, is that while he represents the final expres- 
sion of the tradition of liberal individualism, he is compelled 
to become an advocate of big business monopoly. And this is a 
form of economic organization which, as we shall show in the 
following chapters, must stamp out ruthlessly the last traces 
of liberalism. 

Mr. Wells, in 1926, revealed himself in a novel called Mean- 
while, dealing with the British General Strike, as the arch anti- 
Fascist : yet at the same time he supports that growth of big 
business monopoly which inevitably creates Fascism as its 
political instrument. At last, in 1982, as if wishing, himself, to 
sum up his own contradictions, he appealed to the Liberal 
Summer School at Oxford, for " Liberal Fascists. He wanted 
them to be the Western response to Russia" (Observer, July 81st, 
1982). Mr. Wells has been the untiring champion of the rights 
of oppressed nations : yet he must now champion a cause which 
involves the forcible subjugation of every other nation in the 
world by some one victor state. He has been the strenuous 



LITERATURE 189 

opponent of imperialism, yet he must now champion the ulti- 
mate right of whichever empire proves itself the strongest to 
possess the whole earth. 

With such contradictions underlying his position, it is to be ex- 
pected that Mr. Wells will instinctively abstain from driving his 
investigations too deep. And, indeed, they have become pain- 
fully superficial. 

The Outline of History is Mr. Wells* most considerable work. 
For, in spite of everything, the fact remains that it is, for the 
ordinary reader, the only outline of world history which as yet 
exists. (A world history written from the standpoint of dialect- 
ical materialism which alone could make the dynamics of his- 
tory comprehensible has yet to be written.) By writing it, Mr. 
Wells made good the claim to be ranked in the list of the chief 
living theorists of the capitalist class. For a Universal History 
is the appropriate definitive expression of the " world view " of 
a class : it is a sort of summing up of the culture which that class 
has been able to achieve. And Mr. Wells' Outline of History, both 
in its qualities and its defects, is an almost perfect expression 
of the final stage of the Anglo-Saxon part, at any rate, of capi- 
talist culture. 1 

We can attempt here no detailed discussion of The Outline of 
History as a whole. Our best method will be to give one or two 
examples of the rigid limitations which the circumstances of 
capitalist decline have put upon Mr. Wells' thinking ; limita- 
tions which they put on the thinking of any man who is deter- 
mined to see a hopeful outcome for capitalist civilization. Let 
us take Mr. Wells' treatment of what is after all the key question 

1 Many people will no doubt object that a far more worthy summary of capi- 
talist culture has been made by Oswald Spengler in his Decline of the West. Herr 
Spengler's book is, in effect, another universal history, and it is a much more 
erudite, cultured and literary one than Mr. Wells 1 . (Although it has a whole 
category of defects from which Mr. Wells' history is free.) It would, of course, 
serve as a more obvious example of the case which I am making in these chapters, 
as Herr Spengler, being a far more philosophically minded man than Mr. Wells, 
comes himself to the conclusion that the era of capitalism is over. He is con- 
sciously writing its epitaph. It is for this very reason that I prefer to instance 
Mr. Wells* history. Just as in Chapters V. and VI. I took Mr. Keynes' thesis on 
the possibilities of monetary reform because it was the most optimistic, so now I 
take Mr. Wells' history because it too represents the most favourable case that 
can be made for capitalism. The two alternative German theses the monetary 
thesis of Dr. Hayek and the historical thesis of Herr Spengler thus remain as 
a fortiori reinforcements of the argument of these pages. 



190 THE COMING STRUGGLE FOR POWER 

of our day, the question of imperialism, and then let us follow 
his argument on this one point, at any rate, in some detail. 

Now, curiously enough, it was precisely in respect of imperi- 
alism that Marx's views did need amplification. For imperialism, 
as a dominating factor in the world situation, had not arisen in 
his lifetime. And both Lenin and Bukharin, realizing this, set 
themselves, with the outbreak of the Great War, to achieve a 
richer and more complete understanding of the nature of 
imperialism. Hence, as Mr. Wells was setting up as a critic of 
Marx, an analysis of imperialism gave him an opportunity. 
What has he to offer us ? In an interesting preface which Mr. 
Wells has added to a newly revised edition of The Outline of 
History, published in 1930, he tells us that in 1918 everyone was 
" thinking internationally " and asking such questions as " What 
was an empire ? How had empires begun ? " Now, if the submis- 
sions made in Chapter IV. of this book have any validity, 
" everyone " was entirely justified in raising this particular 
question at that time, for upon the answer to it the future of 
capitalist civilization depended. 

Naturally therefore one might expect that an answer to this 
question would form an important part of Mr. Wells' concluding 
chapters. And, in fact, we find chapter xxxviii. of The Outline 
of History entitled " The Catastrophe of Modern Imperialism." 
What, therefore, must be our astonishment when we search the 
chapter in vain for a rational explanation of the rise of imperi- 
alism. We are given instead a vivacious account of the psycho- 
logical effects upon the European capitalist classes of the 
formation of the German, British and French empires. And then 
by a complete inversion of reality, it is implied that these 
psychological effects are themselves the explanation of imperi- 
alism. Here, for instance, are the two paragraphs which Mr. 
Wells devotes to explaining the growth of imperialism in Britain. 

" The old tradition of the English, the tradition of plain 
statement, legality, fair play, and a certain measure of repub- 
lican freedom, had faded considerably during the stresses of 
the Napoleonic wars ; romanticism, of which Sir Walter Scott, 
the great novelist, was the chief promoter, had infected 
the national imagination with a craving for the florid and 



LITERATURE 101 

picturesque. * Mr. Briggs,' the comic Englishman of Punch in 
the 'fifties and 'sixties, getting himself into Highland costume 
and stalking deer, was fairly representative of the spirit of 
the new movement. 

" It presently dawned upon Mr. Briggs, as a richly coloured 
and creditable fact he had hitherto not observed, that the 
sun never set on his dominions. The country which had once 
put Clive and Warren Hastings on trial for their unrighteous 
treatment of Indians was now persuaded to regard them as 
entirely chivalrous and devoted figures. They were ' empire 
builders.' Under the spell of Disraeli's Oriental imagination, 
which had made Queen Victoria c empress,' the Englishman 
turned readily enough towards the vague exaltations of 
modern imperialism." 

The inadequacy of the last sentence fairly takes one's breath 
away. If we were to take Mr. Wells at his word, we should have 
to say that he considered that modern imperialism was " a 
vague exaltation " and that its rise in Great Britain was due to 
the fact that that country once had a Prime Minister whose 
Oriental imagination enabled him to weave spells. 

In Mr. Wells' whole account of the transformation of the 
hitherto comparatively liberal phase of capitalism into the 
present phase of rampant bellicosity, which he fully recognizes 
to have taken place, and which he so much deplores, there is 
not one sentence (or, to be precise, there is one half of a sentence) 
to show why this happened. For Mr. Wells apparently it just 
happened. Disraeli suddenly wove an Oriental spell, and modern 
imperialism was born. Somebody else apparently happened just 
then to weave corresponding spells in France and Germany, 
and a little later in America and Japan, and the modern world 
situation was complete. This is, indeed, the " spell-binding con- 
ception of history." There is, however, just one half sentence in 
which a hint is given of why these imperial spell-binders got to 
work at this particular moment. We are told that " the new 
British imperialism found its poet in Mr. Kipling " and then 
in a sort of aside " and its practical support in a number of 
financial and business interests whose way to monopolies and 
exploitations was lightened by its glow." 



192 THE COMING STRUGGLE FOR POWER 

Now this is really very curious : for this phrase, if we look 
carefully enough into it, does actually mention some of the 
real elements of modern imperialism. As Mr. Hawtrey has ex- 
plained to us so lucidly it is just this business of the granting of 
necessarily monopolistic rights of exploitation, in developing 
territories, which forces the great powers to undertake imperi- 
alist adventures. It is as if semi-consciously Mr. Wells did really 
know what an empire was. But his " censor mechanism," to 
borrow one of Dr. Freud's earlier concepts, knows quite well 
whither a statement of this concrete material explanation of the 
rise of imperialism would lead. And so Mr. JYells' semi-conscious 
knowledge of the real facts only escapes in queer little asides 
like the one we have just quoted. We can only conclude that 
while Mr. Wells and his friends had, in 1918, just got to the 
point of asking the question " What is an empire ? " they have 
not yet found an answer. As a matter of fact, Lenin and Buk- 
harin had found the answer a year or two before Mr. Wells had 
found the question. In their two classical studies on the subject, 
both produced during the war years, 1 they showed the real 
connection between the change in the character of capitalist 
production and the growth of imperialism. According to them 
and indeed according to a capitalist economist like Mr. Hawtrey 
modern imperialism is not a " vague exaltation," but is the 
inescapable concomitant of a vast increase in the scale of 
capitalist production, amounting tendenciously to the creation 
of national monopolies. Thus imperialism, as Lenin summed it 
up, is the monopolist phase of capitalism. The vast expenditures 
and the great hazards of imperialist adventure have not been 
undertaken by all the great states because of Disraeli's or any- 
body else's imagination and eloquence : they have been under- 
taken, and are still being undertaken, because they were, and 
they are, the only remaining method by which the capitalist 
system could, and can, be kept going. This explanation does 
not appeal to Mr. Wells. For if the growth of imperialism can- 
not be attributed to the eloquence of Disraeli how can we 
expect that even the eloquence of Mr. Wells can restrain it ? 
If imperialism and its horrible consequences, which Mr. Wells 
admits, are not the result of some malign accident, or of some 
1 Imperialism by Lenin. Imperiatttm and World Economy by Bukharin. 



LITERATURE 198 

appalling misdirection by the leaders of humanity, but are in- 
herent in the development of large-scale capitalism itself, of the 
creation of those huge monopolistic businesses which Mr. Wells 
so particularly admires, what hope is there of persuading 
capitalism into peace ? Is it not possible that this is the reason 
why Mr. Wells finds all Marxian theories so repulsively scholastic, 
so unrealistic, so absurd ? 

On page 1068 of The Outline of History we are told that 
" Italy, too, caught the imperial fever." On page 1065, we find 
that at the same time "by an odd accident America had pro- 
duced in President Roosevelt a man of an energy as restless as 
the German Kaiser's, as eager for large achievements, as florid 
and eloquent ; an adventurous man with a turn for world poli- 
tics and an instinct for armaments." For Mr. Wells, then, the 
simultaneous appearance of imperialism all over the world is 
just " an odd accident." We can only say that it is an accident 
that is likely to prove fatal to the continued existence of capital- 
ism. We must in fairness, however, continue the passage on 
America which we have just quoted, for Mr. Wells is arguing 
that Roosevelt did not in fact produce an American imperialism. 
Although Roosevelt was, he says, " the very man, we might 
imagine, to have involved his country in the scramble for over- 
seas possessions," he did not do so. 

" There does not appear to be any other explanation of this 
general restraint and abstinence on the part of the United 
States, except in their fundamentally different institutions and 
traditions. In the first place, the United States Government 
has no foreign office and no diplomatic corps of the European 
type, no body of * experts ' to maintain the tradition of an 
aggressive policy. The President has great powers, but they 
are checked by the powers of the Senate which is directly 
elected by the people. Every treaty with a foreign power must 
first receive the assent of the Senate. The foreign relations of 
the country are thus under open and public control. Secret 
treaties are impossible under such a system, and foreign 
powers complain of the difficulty and uncertainty of * under- 
standings ' with the United States a very excellent state of 
affairs. The United States is constitutionally incapacitated, 
NP 



194 THE COMING STRUGGLE FOR POWER 

therefore, from the kind of foreign policy that has kept Europe 
for so long constantly on the verge of war." 

Mr. Wells* contention that America did not become im- 
perialistic under Roosevelt is of course simply an error of fact. 
One has only to think of the story which they tell in Washington 
of the occasion on which Roosevelt was fomenting a revolution 
in the Republic of Colombia in order to annex the canal zone. 
The President wished to go through some rather absurd for- 
malities about taking the territory. He was rebuked by his 
Attorney General, Phillander C. Knox, with the question, " Oh, 
Mr. President, why bring the taint of legality into it? " x Active 
American imperialism dates, of course, from the Spanish 
American war. It is quite true that it developed somewhat later 
than the European imperialisms. For the American homeland is 
far bigger, and there was therefore far more room for the internal 
expansion of American capitalism. But that phase of internal 
expansion seems to have ended with a jolt, in 1929. American 
imperialism is comparatively young yet, but Mr. Wells should 
give the boy time. America will yet " show the world " in this 
field also. Then Mr. Wells will see what his pathetic reliance on 
the republican institutions of America is worth. 2 

To what extraordinary lengths of formalism his line of 
argument leads Mr. Wells, is shown by his chief suggestions 

1 Mr. Wells' account of this Panama incident is prudent. He writes : " Here we 
will not enter into the political complications attendant upon the making of the 
Panama Canal, for they introduce no fresh light upon the interesting question of 
the American method in world politics." And, of course, America has a Foreign 
Office. It happens to be called " The State Department/' which simple disguise 
has, it seems, confused Mr. Wells. 

8 The sudden love for America, which has become a discernible trait of some 
English liberals such as Mr. Wells, Mr. Harold Laski or Dr. Jacks, is, of course, 
quite comprehensible. For it is quite true that the decay of the whole structure, 
both material and ideal, of capitalist civilization has not in many respects gone 
so far in America as in the old world. Thus a visit to America offers Mr. Wells, 
for example, something of the services of his own " time machine." He is enabled 
to escape back into a less painfully decayed, less ferociously imperialistic, social 
system. But his affection is likely to be short lived. Things move very quickly in 
America. 

The obverse of this attitude is shown by English social democrats, who have 
become professionally anti-American. What they are really doing is, of course, 
to follow the lead of the British governing class in its life-and-death struggle with 
American capitalists. But they find an admirable excuse for this in pointing out 
all the characteristically unpleasant symptoms of capitalism in America while 
retaining a very tolerant heart for the very same symptoms, usually exhibited in 
a still more unpleasant form, at home. 



LITERATURE 195 

for checking imperialism. He now gives no hint of there being 
any connection whatever between the economic and social 
structure of states and their " method in world politics." On the 
contrary, imperialism, he implies, is all the fault of certain insti- 
tutions which, by ill luck one supposes, most states have estab- 
lished. It is, in particular, the creation of certain diabolical 
places known as " embassies and foreign offices." Here, for 
example, is a sentence (page 1063) in which Mr. Wells both de- 
fines inperialism and suggests his remedy. 

" Modern imperialism is the natural development of the 
Great Power system which arose, with the foreign office 
method of policy, out of the Machiavellian monarchies after 
the break-up of Christendom. It will only come to an end 
when the intercourse of nations and peoples through embassies 
and foreign offices is replaced by a federal assembly." 

Thus, in Mr. Wells' view, imperialism is the product of em- 
bassies and foreign offices. The whole of a great phase in the 
history of man, the whole of that continuous conflict of national 
force, which to-day shakes the earth, is the product of one of 
the minor instruments by which each empire, in times of peace, 
carries on that conflict. In the same way, one supposes, The 
Outline of History is the product of Mr. Wells' pen. 

The third of Mr. Wells' Outlines, entitled The Work, Wealth 
and Happiness of Mankind, has just (1932) been published. 
It marks a quite new stage in his intellectual surrender to the 
pretences behind which capitalism has now to conceal its real 
nature. It is not possible to say what Mr. Wells' new book is 
about. He devotes a chapter, twenty-six pages in length, to the 
attempt to inform us ; but it cannot be said that he succeeds. 
What he tells us is that the three Outlines provide " a complete 
modern ideology," and that history, biology, and economics are 
the three main factors in such an ideology. Since, therefore, 
The Outline of History and The Science of Life account for the 
two former factors, we might reasonably expect that this new 
work would be devoted to economics. But of its eight hundred 
odd pages, only a few contain anything about economics at all. 
Indeed, the only specifically economic chapter in the book is 



196 THE COMING STRUGGLE FOR POWER 

chapter ix. This consists of an exposition of Mr. Wells' views on 
monetary problems. Mr. Wells has just reached the point of an 
unquestioning belief in an application of the Quantity Theory of 
Money, as a cure for all the ills of capitalism. No doubt Mr. 
Keynes has, perhaps wisely, refrained from trying to tell him 
about the proportion of savings to investments. " All this so 
far is fairly simple," Mr. Wells writes at the end of his exposi- 
tion of monetary theory, u and, now universally admitted to be 
entirely false," we must add. 

If, however, Mr. Wells' book is not about economics, what is it 
about ? Some hint of an answer may perhaps be found in another 
phrase which he uses in telling us of the object of his work. It is, 
he writes, " some explanation of the toil and motives that bind 
mankind together in an uneasy unity." We begin to realize the 
extreme confusion of purpose which lies behind the book from 
the queer conjunction of these words " toil and motives." If Mr. 
Wells had written an analysis of the motives of mankind, he would 
have written a work of psychology and economics. If he had 
written a panoramic description of the toil of mankind, he would 
have written a work of popular technology. As it is, he has 
never made up his mind as to what kind of a book he was trying 
to write. This is not to object, however, to Mr. Wells' attempt to 
broaden capitalist economics, to break down the barriers which 
its more academic professors seek to erect between it and poli- 
tics. Mr. Wells rightly implies that one of the reasons why 
capitalist economics, however subtle and accurate their chains 
of reasoning may be, are entirely sterile, is because of the ludi- 
crous falsity of their underlying psychological assumptions. For 
capitalist economists heap the whole of humanity, worker, 
peasant, merchant, entrepreneur, rentier, landlord, and aristo- 
crat into one mass. They treat them all as an undifferentiated 
pile of human atoms reacting similarly to similar stimuli. Mr. 
Wells admits that this is false ; that we get nowhere until we 
have divided mankind up into groups and categories. And he 
further acknowledges, though most grudgingly, that it is the 
Marxists alone who have done this. 

" The Marxist indeed makes some pretensions to psychology 
with his phrases about a ' class conscious proletariat ' and a 



LITERATURE 197 

4 bourgeois mentality * and the like. He shows, at least, an 
awareness of difference of persona. But under the stresses of 
political and social combat such phrases have long since de- 
generated into mere weapons, aspirations and terms of abuse. 
So discredited and warped are they that they will be of no use 
to us here." 

Elsewhere, he tells us that his book is "to supersede the 
vague generalizations on which Marxism rests and concentrate 
and synthesize all those confused socialist and individualist 
theorizings of the nineteenth century which still remain as the 
unstable basis of our economic experiments." All this means, we 
gather, that Mr. Wells rejects the Marxian categories of social 
classes and will substitute new ones of his own. What has he to 
offer us ? A little talk about " persona." (A term taken from 
Dr. Jung but applied quite newly by Mr. Wells.) These " per- 
sona " are men's ideas of themselves ; and there exist the follow- 
ing personas : the peasant persona, the nomad persona and the 
educated persona. A more lively bit of nonsense could hardly be 
imagined than chapter viii, in which Mr. Wells plays with these 
three social categories of his own invention. And these are the 
new concepts which shall replace the visible, palpable realities 
of the Marxian social classes ! 

As soon as Mr. Wells comes to any descriptions of existing 
society, his new categories cease to fit and he forgets all about 
them. Thus chapter x is headed " The Rich, the Poor, and their 
Traditional Antagonism." This sounds a little more like reality ; 
and so it is. With the exception of some particularly silly, and in 
some instances self-contradictory, anti-Russian propaganda, 1 
this is the best chapter in the book. Reality, it seems, has 
literally forced itself upon Mr. Wells' attention. He actually says 
this himself : 

" We began this work as a survey of productive activities. 
It was only as our study became closer and more searching 

1 Thus on page 707, we are told that in Russia " to point out defects in the 
Five Year Plan is a crime.*' On page 509, however, we had been told that u the 
frank admission of difficulty and disappointment is not the only virtue of the 
Bolshevik." 



198 THE COMING STRUGGLE FOR POWER 

that this contrast of the rich who have got the money and 
the poor who have not, came, almost in spite of our design, 
athwart the spectacle. Gradually we have been forced to 
recognize that in the course of twenty-five centuries or so, 
the ancient rules, servitudes and tyrannies of mankind have 
given place, step by step, by the substitution of money for 
other methods of compulsion, to the rule of wealth." 

Here is the truth, excellently expressed. In spite of all Mr, 
Wells' wonderful fertility of invention ; indeed precisely be- 
cause, in the last resort, he is unable wholely to disregard the 
main facts of the subject which he has under discussion, the 
contrast between the rich who have got the money and the 
poor who have not, " forces itself athwart " his description of 
the work, wealth and happiness of mankind. But in so far as it 
has done^ so, the reader cannot but see beneath Mr. Wells' 
pleasant picture, the real unemployment, poverty and misery 
of mankind. 

Such passages of strangely frank admission as the above, and 
the sentence hinting at the real basis of imperialism, reveal the 
constant struggle between Mr. Wells' sharp intellect, which 
finds it difficult always to disregard all the facts, and his over- 
powering capitalist instincts, which simply cannot endure the 
implications of these facts. 

It has been worth while to follow up the efforts of one of the 
most gifted of the remaining theorists of capitalism to analyse 
and to comprehend the phenomena of to-day. If those efforts led 
only to the strangest contradictions, that is certainly not the 
fault of Mr. Wells. Mr. Wells has abilities not inferior in many 
respects to those of the men who laid the theoretical basis of the 
capitalist system. He is involved in his contradictions because it 
has become impossible to comprehend or order the phenomena 
of our times without the use of the hypothesis of dialectical 
materialism. 1 

1 How categorically Mr. Wells rejects the materialist conception of history can 
be gathered from his quotation of Lord Acton's (the Catholic historian) remark : 
" It is our (the historian's, that is) function to keep in view and to command the 
movement of ideas, which are not the effect but the cause of public events. 9 * 
" That is precisely where we stand " is Mr. Wells' comment (The Work, Wealth 
and Happiness of Mankind). 



LITERATURE 199 



A more curious example of the effect on its writers of the 
phase which British capitalism has passed through during the 
last fifty years is afforded by the case of Mr. Bernard Shaw* 
Mr. Shaw is probably regarded by educated public opinion, at 
least in Great Britain, Germany and America, as the foremost 
writer of our day. And he too, like Mr. Wells, has applied him- 
self both indirectly and directly to the study of society as a 
whole. Endowed with mind of keener edge than his contem- 
porary, he was one of the few Englishmen to read and under- 
stand the first volume of Capital in the first decade after its 
publication. But his reaction to that experience was a very 
strange one. It induced him to join the Fabian Society ! And yet 
to do so was in a sense logical ; it showed at any rate Mr. Shaw's 
shrewd grip upon immediate reality : his almost if not quite 
commercial sense of what was immediately possible. It is an in- 
teresting speculation to consider what would have happened if, 
in the 'seventies of the last century, Mr. Shaw had become a 
revolutionary instead of a Fabian. It is very possible that he 
would to-day be in secure possession of immortal fame as one of 
the two or three great Europeans of the recent centuries. But it 
is also probable that he would already have been dead for some 
considerable time. His life would have been far less successful, 
easy and economically secure. He would probably have been 
denied even persecution ; and if he had died, say about 1913, he 
would have died as Marx himself died in the 'eighties, in what 
would have seemed to the capitalist world to be failure and 
neglect. There is little doubt that Mr. Shaw foresaw all this 
more or less clearly. He grasped the inherent contradictions of 
capitalism, the impossibility of any solution short of com- 
munism. But he also grasped the fact that British capitalism 
at any rate would last his time. 

And Mr. Shaw, as he has himself told us, had the most pas- 
sionate desire for success, for fame, money, power, ^nd for the 
enjoyment of these good things in his own lifetime. He has 
triumphantly secured them, $nd if he has paid as a price his 
opportunity of immortality, he may well tell us that he is satis- 
fied with the bargain. 

Thus Lenin's epigram remains the definitive description. He 



200 THE COMING STRUGGLE FOR POWER 

called Mr. Shaw " a good man fallen amongst Fabians." And 
Lenin, no doubt, meant not merely that Mr. Shaw had fallen 
amongst the members of the Fabian Society. He meant that it 
was Mr. Shaw's destiny that his life's span should fall in the 
Fabian epoch of British capitalism : that his whole youth should 
be spent in that long and marvellous afternoon of British gov- 
erning class civilization, before the inevitable growth of imperi- 
alism had brought on the thunder of evening : before it had 
brought on that thunder of shattering high explosives which Mr. 
Shaw himself hears so well, and which he makes us hear in the 
last act of Heartbreak House. 

The third social theorist of our epoch, whose views we may 
take as a sample of the effect of our present environment on its 
writers, is Mr. J. M. Keynes. Mr. Keynes is the ablest of the 
surviving economists of the British capitalist class. We saw in 
Chapters V and VI whither we were led by following his main 
line of argument in his own special field of monetary theory. 
Mr. Keynes is, however, much more than a specialist on mone- 
tary problems. In fact, he is more than an economist in the 
narrow sense of the word. He is, as we have suggested, a major 
social and political theorist of the English-speaking capitalist 
class. (Moreover, if command of the English language is to be 
the test then certainly much of Mr. Keynes' work must be called 
literature.) As it happens, it is at the moment particularly con- 
venient to take a look at his more general views, since he has 
recently (1982) republished all his more important occasional 
papers, composed over the last ten years, in a volume entitled 
Essays in Persuasion. 

In the preface of this work, Mr. Keynes tells us that he has 
been a Cassandra " who could never influence the course of 
events in time." And it is essential that this remark should 
be kept in mind as one reads Mr. Keynes' various prescriptions 
for the survival of capitalism. The application of the measures 
of " intelligent management " which he suggests will ensure, he 
is convinced, that in about a hundred years' time capitalism 
will have carried the human race into an era of universal plenty 
and security. For, needless to say, the thesis which runs through 
Mr. Keynes 9 collected papers is the exact antithesis of these 



LITERATURE 201 

pages. We have sought and, it is submitted, discovered, a direct 
causal connection of a necessary and predicable character, be* 
tween the inherent characteristics of capitalism and the present 
disastrous condition of the world ; and we have discovered 
in particular a connection between these characteristics and the 
recurrence of crises such as that which began in 1981. We sub- 
mit, further, that it is possible to predict future and far worse 
consequences from these characteristics of capitalism. Natur- 
ally, therefore, we draw the conclusion that the only hope for 
the dawn of that day when man shall have finally reached (to 
use Mr. Keynes' definition of Utopia) a level of civilization at 
which the economic problem is no longer his chief concern lies 
in the overthrow of capitalism. For Mr. Keynes himself rightly 
says that such a level of civilization is now becoming a technical 
possibility. 

Mr. Keynes, on the contrary, finds no causal connection what- 
ever between the character of our economic system and the 
present condition of affairs. On the contrary, he says, again in 
the preface to his book, that his " central thesis " and his 
** profound conviction " is that 

" the Economic Problem, as one may call it for short, the 
problem of want and poverty and the economic struggle 
between classes and nations, is nothing but a frightful muddle, 
a transitory and unnecessary muddle." 

Mr. Keynes is a most satisfactory writer : he says clearly and 
forcibly what the other theorists of his class merely mumble and 
mutter. For example, it is perfectly consistent with the above 
expression of opinion that he has not the slightest use for the 
Marxist case. He calls Capital " an obsolete economic text-book 
which I know to be not only scientifically erroneous but without 
interest or application for the modern world." And as we read 
Mr. Keynes' always reasonable, persuasive, and logically, self- 
consistent pages, we are driven more and more to realize that 
it is precisely his basic eclecticism, his profound antagonism for 
the only unitary theory which will account for the political and 
economic phenomena of the modern world, which renders so 
academic, so beside the real point, nearly all of his suggestions. 



202 THE COMING STRUGG&E FOR POWER 

Has he never, one cannot help wondering, paused to enquire 
why his Essays in Persuasion have been so uniformly unpersua- 
sive : has he never asked why he has always been unable " to 
influence the course of events in time " ? If, indeed, his pro- 
posals for the salvation of capitalism are sound, as in one sense, 
as in isolation, taken as logical propositions independent of time 
and place, some of them are sound, why have they never any- 
where been applied ? Surely, the leaders of capitalism all over 
the world are not all so foolish or so ill-advised, as to ignore in 
their desperate need, such hopeful advice ; and to rush wilfully 
upon their own destruction ? And yet this is just the hypothesis 
that Mr. Keynes and all " enlightened " capitalist opinion has 
to resort to in order to account for the present situation. It is 
felt that capitalism is a perfectly sound system which by some 
dreadful mistake the capitalists are themselves now wilfully 
smashing to pieces. 

Nothing could be further from the truth. The leaders of 
capitalism are not fools : they are for the most part very able 
men struggling against overwhelming difficulties. There is, in 
fact, a complete contradiction between our diagnosis of the 
present situation and that of Mr. Keynes. And this contradic- 
tion arises precisely from a basic difference of opinion as to 
whether there is a causal chain between the historical develop- 
ment of capitalism and the recurrence of crisis and war, or 
whether their coincidence is, as Mr. Keynes says, " nothing but 
a frightful muddle." There is this further point, however. The 
causal chain which we have attempted to trace has not been 
exclusively composed of material links (using the word material 
in its narrowest sense). It has involved the view that certain 
economic and material conditions determine certain mental and 
psychological points of view : and these mental and psycholo- 
gical points of view, in their turn, determine by reaction further 
material developments. In the causal chain, each economic 
link has been followed by a mental and psychological one : it 
has been a chain of action and reaction between the economic 
basis and the ideal structure, which has been built on that basis. 
To instance a few successive links, the growth of large-scale 
production caused certain consequences in the minds of entre- 
preneurs which made them strive towards the formation of 



LITERATURE 208 

monopolies. The formation of monopolies in turn caused, for 
reasons which we gave, certain changes in the minds of states- 
men which caused them to undertake imperialist adventures. 
The existence of empires causes certain further tendencies in 
the minds of the governing class which must sooner or later 
involve them in war. And no one denies that wars, in their turn, 
cause marked economic changes. 

The whole contradiction between the thesis subscribed to in 
these pages and the point of view of the theorists of the capitalist 
class arises from the fact that they do not accept this, or any 
connection between economic cause and psychological effect. 
For Mr. Keynes, there is evidently no connection whatever 
between the new forms which capitalism is visibly assuming 
and the policies which its leaders adopt. Thus, in his well-known 
paper The End of Laisser Faire, he tells us that his own view 
is that " capitalism, wisely managed, can probably be made 
more efficient for attaining economic ends than any alternative 
system yet in sight." But the argument of this book is that the 
character of capitalism is such that it is inconceivable that it can 
be " wisely managed " : that the development of world capi- 
talism into a series of rival imperialisms was a development in- 
evitable from the very nature of the system. Indeed, Mr. Keynes 
himself defines " modern capitalism " as " without internal 
union, without much public spirit, often, though not always, a 
mere congeries of possessors and pursuers." How can he speak 
of possessors and pursuers " wisely managing " each other ? 

Let us take, as a further example of this failure to think of 
mental and material phenomena with some comprehensive 
unity, Mr. Keynes' extraordinarily unrealistic treatment of the 
question of imperialism. There is, for instance, his well-known 
view that the wealth of the modern world is due to the 
44 magical " operation of compound interest. Thus he calculates, 
perhaps half playfully, that part of the booty brought back by 
Drake in the Golden Hind, which was invested by Queen Eliza- 
beth in the Levant Company, the profits of which were in turn 
reinvested in the East India Company, has by the accretion of 
8J% compound interest added up to the present (1929) total of 
British foreign investment. Could there be a more perfect 
example of the abstraction of every element of reality from a 



804 THE COMING STRUGGLE FOR POWER 

proposition under discussion? Think for a moment of the 
aggressions of Chatham, of the guile of Clive and Hastings, of 
the slave ships out of Bristol, of reaction incarnate in William 
Pitt, of the cold territorial acquisitiveness of Lord Salisbury, of 
the bluster and corruption of Rhodes, to name a few examples at 
random, which have in fact alone enabled Drake's 42,000 to 
grow into the 4,200 millions, which is the present (1929) foreign 
investment of Great Britain ! Must we not stand aghast when 
Mr. Keynes quietly tells us that the accumulation of Britain's 
imperial wealth is due to the magical operation of the law of 
compound interest ? Such disingenuousness is almost majestic. 
In the essay entitled " Am I a Liberal ? " Mr. Keynes writes : 

" As regards the empire, I do not think that there is any 
important problem except in India. Elsewhere, so far as prob- 
lems of government are concerned, the process of friendly 
disintegration is now almost complete to the great benefit 
of all." 

Are we to suppose then that the tremendous efforts being put 
forward by the governing classes of all the imperialist states to 
extend and consolidate their empires, almost at any risk, are 
simply a mistake ? This is the old liberal pacifist view again 
a delusion surely unworthy of a man of Mr. Keynes' calibre ? 
No, the leaders of all the great nations of the world are not fools, 
wilfully destroying their own system. They are men in the grip 
of destiny. They are obliged to perform acts which are disastrous 
to their own larger interests because their own minds have been 
conditioned by the previous economic developments of capi- 
talism. They are able to act in a certain way, and only in that 
way, because they themselves are a part of, and, on the whole, 
are an unconscious part of, their own economic system. 

Thus, the philosophical basis upon which Marxism rests : the 
view which attributes unity, though not identity, between the 
material and the ideal, between theory and practice, is not 
without its practical application. But for Mr. Keynes there is 
no such unity. Any kind of economic system may be combined 
with any kind of point of view amongst the men who control 
it. He admits, indeed, that " the economic problem, the struggle 



LITERATURE S05 

for subsistence, always has been hitherto the primary, most 
pressing problem of the human race." And yet he believes that 
the kind of solution which men have found for this problem has 
little or no effect upon their general point of view : that it has 
no perceptible influence in determining what kind of men they 
become. True, with another part of his mind he knows that 
capitalism has consequences in the realm of ideas which are 
"extremely objectionable." 1 He thinks, however, that by sub- 
jecting ourselves to these " extremely objectionable " .conse- 
quences for another hundred years or so, we shall solve our 
economic problem. Can he not see that even if we could do so, 
" we " should not be there at all at the end of a hundred years : 
that these capitalist values, which he himself calls " detestable," 
would long before then have made us totally unfit for the pro- 
mised land of economic plenty? Indeed, they would have so 
degraded nay they are even now so degrading the whole race 
that, far from attaining any promised land of plenty, the race 
would certainly lose in titanic wars that level of civilization 
which it has. 

This extreme indifference to the real drift of events this 
conviction that the crisis in capitalism is not only a " frightful " 
but a " transitory and unnecessary " muddle, has hitherto 
allowed Mr. Keynes to believe in a kind of restoration of the 
world free market. Now, however, he is becoming a little more 
realistic, and is inclining towards that school of thought the 
existence of which we noticed in Chapter VII, and which we 
called " the national planners." And again in this field, his 
blindness to the political consequences of economic tendencies 
will for some time yet enable him to plan nationally without 
ever definitely answering his own question ** Am I a liberal ? " 
with a negative. When that moment does come, however, the 
next question which Mr. Keynes will have to ask himself will be 
" Am I a fascist ? " And the answer will be in the affirmative. 

1 For further evidence that Mr. Keynes, like Mr. Wells, really knows better : 
that he does sometimes see the effect of economic change on ideas, see the historical 
chapter of his Treatise on Money. 



CHAPTER XI 
Literature. II 

IN discussing such sociological writers as Mr. Wells, Mr. Shaw 
and Mr. Keynes, we have not yet even mentioned what literary 
people call literature. Let us therefore continue our somewhat 
circumspect advance towards the writers of " pure " literature. 
And let us, as our next stage on the ascent, consider for a moment 
a younger generation of writers who, though still sociologically 
minded are so to a far lesser degree, than are, for example, 
Mr. Wells and Mr. Shaw. Of these writers let us select more or 
less arbitrarily, of course, but also because these three seem the 
most considerable, Proust, D. H. Lawrence, and Mr. Aldous 
Huxley. In a sense, no three writers could have less in common. 
Yet all three reflect in a kind of agony the characteristics of the 
epoch in which they live. Each of them, no doubt, would say 
that this was the agony which every man of perception from 
Lucretius to Pascal had felt when he began to comprehend the 
nature and necessities of man's life in the universe. And in one 
sense this is no doubt true. At all times in the past the conditions 
of man's life have been the subject of tragedy. The expression 
of the tragic view of life : that point of view which is the one 
thing which all the great writers of all the ages have had in 
common, is an effort to ameliorate the lot of man, not by seek- 
ing to deny or conceal what have been the well-nigh unbearable 
necessities of man's existence, but by offering to us the example 
and consolation of ill fortune faced consciously and stoically by 
undeceived men. And each of these three modern writers has 
shared in the tragic view. 

Can it possibly be denied, however, that there is another 
strand in their pessimism ? In so far as they are great writers, 
they share in the tragic tradition of the race. But do we not all 
feel that each of them is only partly a great writer ? They are 
men possessing talents not inferior to the representative writers 
of other times. And yet, somehow, is there not a question-mark 
to be put after their names ? Is there not something doubtful, 
something mixed, about their achievement ? And does not this 
doubt, on closer inspection, derive from the very nature of the 



LITERATURE 207 

material on which they have had to work ? For every writer, no 
matter how much he likes to deceive himself on this matter, can 
only work on the material which the life of his time presents to 
him. If, as in the case of the three writers in question, their 
work consists in a commentary, either in the form of the novel, 
or still more directly in the form of essays, on the actual social 
intercourse of their times, there can surely be no argument about 
this contention. 

Of the three writers, Proust has achieved the most complete 
work. Yet it was just in his case that the social necessities of 
the time and place of his life played the most important role. 
For Proust's enormous work, besides being so much else, is 
quite undeniably the odyssey of snobbery. It is, moreover, in 
one aspect the final proof of the absolutely necessary and praise- 
worthy character of snobbery in a class society ; it is the 
justification of raising the impulse to social success to the 
level of one of the great elemental passions of humanity. To 
a French bourgeois who died in the third decade of the 
twentieth century, snobbery was, Proust demonstrates, an 
elementary duty. 

Proust's almost infinitely prolonged and infinitely subtle 
quest for how he has spent his life, discovers that in the end 
he has spent it in just this one activity : in the realization of 
social success. And he concludes that on the whole it has been a 
well spent life. For the little boy of Du C6t6 de chez Swann there 
was no other way of living so fully and completely, of experienc- 
ing all that there was at that time and place to experience in 
life, as by entering successfully that great world which at first 
sight seemed to be represented by Swann but which turned out 
to have, Chinese boxlike, so many ranks within ranks, so many 
distinctions, real and false, so many tantalizing false horizons 
and unexpected withdrawals, that a lifetime was needed to 
explore it. And if, in the end, the whole exploration proved to 
have been vain, if when the ultimate arcana had been reached 
its inmates proved to be not the magically refined and delight- 
ful persons of imagination, but to be every whit as hard, cruel, 
crude and Idche as everybody else ; if the Duchesse de Guer- 
mentes could not attend to the fact that her dear friend Swann 
was dying because she was late for a ball, that did not mean 



908 THE COMING STRUGGLE FOR POWER 

that any better results could have been obtained by devoting 
one's life to any other purpose. If every one of these " people 
of the world," whom we are first shown in such excruciatingly 
desirable a guise, are very gradually divested, by the light yet 
inexorable fingers of the narrator, of every element of beauty, 
charm, or wit, nay even of the most elementary human 
decencies ; if Odette de Crecy, from being an angel who can 
illuminate a whole park with her beauty, becomes the archetype 
of all stupid, grasping, demi-mondaines ; if Madame de Ville- 
parises, from being the most delightful of grandes dames, is 
discovered first to be by no means smart for she commits the 
sin of publishing memoirs and is seen finally as a dreadful 
banal old woman with eczema all over her face ; if the 
aristocracy turns out to be not by any means the unapproach- 
able pinnacle it once seemed; if the arch-bourgeois Madame 
Verdurin suddenly becomes an arch-aristocrat and Princesse 
de Guermentes ; if Proust's snobbery is given not a moment's 
peace by his implacable intellect, which exposes with a fiendish, 
self-torturing delight the vulgarity and baseness of the social 
values which he has spent a lifetime, first in exploring and then 
in expounding, that does not mean that there was anything else 
to do with his life but thus to explore and to expound. By 
devoting it to the social passion he had at any rate penetrated 
to what was, presumably, the highest and most cultivated point 
in the society of the most profoundly civilized nation on 
earth. 

Thus the discovery that this refinement and cultivation was 
all a sham did, at any rate, assure him that nowhere else was 
there anything better. The note of lamentation which rises 
throughout the concluding phases of Proust's work is a lamenta- 
tion for a society which is on the road to dissolution. One recalls 
that passage in Le Temps RetrouvJ in which Proust meets again 
the characters of his work after the interval of the war. He has 
the momentary illusion that the experience may have improved 
them. He discovers that, on the contrary, it has made them all 
worse not better, narrower, more selfish, less humane. Proust, 
in truth, sang a long agonised requiem mass over the highest 
expression of human life of which French bourgeois society 
under the Third Republic had been capable. 



LITERATURE 209 

Mr. Edmund Wilson, the American writer, to whose penetrat- 
ing work of criticism Axel's Castle, I, and every student of the 
mental life of to-day, are deeply indebted, sums up the work of 
Proust in this eloquent passage : 

" Imaginatively and intellectually, Proust is prodigiously 
strong ; and if we feel an element of decadence in his work, it 
may be primarily due to the decay of the society in which he 
lived and with which his novel exclusively deals the society 
of the dispossessed nobility and the fashionable and cultivated 
bourgeoisie, with their physicians and their artists, their 
servants and their parasites. We are always feeling with Proust 
as if we were reading about the end of something this seems, 
in fact, to be what he means us to feel: witness the implications 
of the bombardment of Paris during the war when Charlus is 
in the last stages of his disintegration. Not only do his hero 
and most of his other characters pass into mortal declines, 
but their world itself seems to be coming to an end. And it 
may be that Proust's strange poetry and brilliance are the 
last fires of a setting sun the last flare of the aesthetic idealism 
of the educated classes of the nineteenth century. If Proust 
is more dramatic, more complete and more intense than 
Thackeray or Chekov or Edith Wharton or Anatole France, 
it may be because he comes at the close of an era and sums 
up the whole situation. . . . Proust is perhaps the last great 
historian of the loves, the society, the intelligence, the 
diplomacy, the literature and the art of the Heartbreak House 
of capitalist culture ; and the little man with the sad appeal- 
ing voice, the metaphysician's mind, the Saracen's beak, the 
ill-fitting dress-shirt and the great eyes that seem to see all 
about him like the many-faceted eyes of a fly, dominates the 
scene and plays host in the mansion where he is not long to be 
master." 

No contrast could seem more profound, nor could prove more 
superficial, than the contrast between Proust and the English 
novelist, D. H. Lawrence. Lawrence was the one copious and 
vital writer which England has produced since the war : the one 
man who still wrote as if he knew that it was worth while to 

OP 



810 THE COMING STRUGGLE FOR POWER 

write. He suffered, however, both personally and as a writer, 
to the most intense degree from the nature of his environment. 
Lawrence was by origin a worker, the son of a Nottinghamshire 
miner : a man from the very heart of England, a man from that 
section of the English working class, the miners, who have to 
the greatest degree succeeded in maintaining a life of their own. 
Lawrence, until, at any rate, the very end of his life, was not 
consciously interested in politics. He felt that he had no time 
for them. He knew politics, it seems, only in the form of English 
party politics, and his piercing eye saw through their pretences 
at a glance. But he was extremely interested, both consciously 
and unconsciously in class, and in class relationships. It would 
be hardly too much to say that class relationships obsessed him. 
For the same theme recurs over and over again in his novels. A 
young vigorous, unself-conscious worker is thrown into govern- 
ing class society and has a love affair with an aristocratic woman, 
who has up till then been unawakened by the men of her own 
class. For example, Aaron's Rod and The Ghost, one of his best 
short stories, contain this theme : it appears again in his post- 
humous story The Man Who Died, where his proletarian hero is 
by trade a carpenter. And it is given its clearest expression in 
that curious tract-like novel Lady Chatterley's Lover. In this 
case, the governing-class husband is made actually, as well as 
symbolically, impotent and crippled by the war. The prole- 
tarian hero is always, of course, Lawrence himself. 

Thus, after all, we find that Lawrence's fancy ran in the same 
direction as Proust's. Lawrence also, if not in his own person 
then in the world of his fantasy, climbed the social heights of 
existing society, to see if by chance something living might be at 
the top. And Lawrence also comes back with the report that 
there is nothing. The half Jewish French bourgeois and the 
Notts miner both made the same pilgrimage : they both went 
" du c6t6 de chez Swann " and " du cot6 des Guermentes." 
And, no doubt, they were in a sense quite right. If one rejects 
politics ; if one rejects, like the philosophers, the proposal to 
change life ; if one seeks only to explain it, then truly the best 
thing that one can do is to seek out what is highest, and so pre- 
sumably best, in the old society. But both Proust and Lawrence 
had the misfortune to see through their social ideal. Indeed, it 



LITERATURE 811 

was unavoidable. They were born out of due time : too early to 
have abandoned the social ideals which still existed, too late to 
find those ideals in a condition of preservation which could 
satisfy them. 

Lawrence has a passage in one of his short stories in which he 
describes admirably the degeneration in the quality of the old 
English governing class, how the cultivated, well educated, wise 
and careful (though, of course, quite ruthless) men of the type of 
Mr. Asquith were supplanted in 1916 by a cruder type of big 
business Philistines, represented by Mr. Lloyd George. He saw 
that the war had driven British capitalism to resort to methods 
which lowered the whole level of such civilization as it had 
created. He saw its coarsening, and cheapening, going on 
steadily in the years after the war. The spectacle nauseated him 
and finally killed him. For somehow he does not seem to have 
ever even conceived of any alternative. The only alternative 
which he saw was the Labour party, and this he rightly rejected 
at once as a device to castrate, as he might have put it, his own 
class. For in a kind of semi-conscious way he had faith in the 
victory of the workers. Indeed, if you like to read them so, his 
novels with their recurrent theme of salvation for the lovely 
woman of the governing class by the worker who at once 
captures and rescues her, are myths of the young worker revivi- 
fying society ; as, truly, the workers alone can do. His novels get 
their incomparable vitality from this theme. But somehow it 
never quite came up into the conscious ; and Lawrence, instead 
of standing outside of capitalist society and drawing strength 
and assurance from its decline, became himself inextricably in- 
volved in that decline. Hence his agony, his tortured excursions 
into a queer and, after all, rather amateurish sort of sexual 
mysticism ; hence, the terrible sense of frustration which some- 
times overshadows even his incomparable passion. 

Between Mr. Aldous Huxley and Lawrence there is a great 
contrast, far more profound than that between Lawrence and 
Proust. Mr. Huxley has won his position in English letters by his 
erudition, wit and power of intellect rather than by any gifts of 
intuitive imagination. Mr. Huxley's greatest advantage is that he 
is free from that taint of provincialism which mars the work of 
so many of the most eminent English writers. He is at home 



lit THE COMING STRUGGLE FOR POWER 

in European civilization : he has at his command the whole 
range of that not inconsiderable culture which the European 
capitalist class has built up for itself during the period of its 
domination. 

It is appropriate that it should be a Huxley, a member of one 
of those principal English middle-class families, which formed 
and still form, one of the main pillars of the British capitalist 
system, who should most consciously describe its closing period. 
And what a description it is ! In a series of novels and essays, 
Mr. Huxley has sent the long, delicate, probing fingers of his 
analysis into every corner of the life of capitalist society. His 
findings are always the same. Go where you like, " do what you 
will," you will never escape from the smell of ordure and decay. 
Mr. Huxley would, I think, deny that this has anything what- 
soever to do with the characteristics of the present economic 
system. He believes that it is a characteristic of human life 
itself. And to be sure, no one denies that a part of the horror of 
life (and part of the joy of life too) is irradicable, is independent 
of any social system. 

On the other hand, it is surely demonstrable that many of the 
characteristics of life which in particular make Mr. Huxley 
resort to his now almost automatic gesture of holding his nose, 
are the direct products of the specific phase of capitalist civiliza- 
tion in which he lives. Let us take his latest work a Utopia, 
entitled Brave New World. Not that it is of comparable im- 
portance to much of his earlier writings. Books about the future, 
however, generally tell us a great deal about their authors* 
opinions of the present. Under the shelter of scientific fantasy 
they are able to express, partly unconsciously no doubt, what 
they really think about life as it exists here and now. In Brave 
New World, the typical Huxley hero naturally appears. Bernard 
Marx, the lonely, physically handicapped, intellectual, is not 
more difficult to identify than the club-footed Philip of Point 
Counter Point, or than are those innumerable small, dark prole- 
tarians who swarm amorously through the works of D. H. 
Lawrence. (Not that these self-portraits are identical with their 
authors : often they are caricatures, often idealizations.) But 
what are significant are Bernard's misadventures in Utopia. 
For they are the misadventures of the typical intellectual in the 



LITERATURE 21S 

Europe of 1982. Brave New World, indeed, marks the point at 
which the Utopists, they too, turned pessimistic. 1 

It is instructive, for example, to compare Brave New World 
with one of Mr. Wells' Utopias with, say, Men Like Gods. 
Mr. Huxley's book is naturally far more sophisticated, rus6, 
knowledgeable. It makes Mr. Wells seem very simple minded. 
But is it as a matter of fact any more objective, any more self- 
consistent, any less completely a projection of the author's 
subjective reactions to present day life ? Does Mr. Huxley's 
belief that science is about to produce a nightmare world rest 
on any closer examination of the factors which determine the 
nature of the life of a community, than does Mr. Wells' faith 
that science will soon make us like gods ? For example, why, is 
there no indication in Brave New World of how the gigantic new 
scientific means of production which have been created, are 
owned ? No doubt such a question would seem childish to Mr. 
Huxley. He would say that by the date of his Utopia the whole 
question of ownership will have long ago disappeared. The 
workers have, as he shows, been degraded by careful pre-natal 
deformations to a psychological condition exactly appropriate 
to the performance of menial labour. Very well then, but in that 
case why are we introduced to a symptom which could only arise 
in a society based on profit making, derived from the ownership 
of the means of production ? We are told that one of the chief 
duties of the citizens of the world state is compulsory consump- 
tion. For example, we are informed of the duty of throwing away 
old clothes as soon as they are at all worn, and of the sinfulness 
of mending. These duties are hypnotically inculcated into all 
citizens. Again, children are encouraged to play only such 
games as require expensive and elaborate apparatus. For the 
" prosperity " of industry depends upon keeping up the rate of 
consumption. 

If the incomes of the ruling class depend, as to-day, upon a 
profit derived from the ownership of the instruments of pro- 
duction, it would be, of course, quite logical for them to incul* 
cate such doctrines. But there is no suggestion in Brave New 

1 A very well constructed, pessimistic Utopia, entitled The Question Mark by 
Bliss Jaeger appeared some years before Mr. Huxley's book. It followed the same 
main theme, that is the splitting up of the race into sharply divided " castes." 



814 THE COMING STRUGGLE FOR POWER 

World that this is the case. Indeed, the " Alphas,'' as the 
governing class are called, are represented as salaried workers. 
And Mr. Huxley is quite right in assuming that in a planned 
world state the concept of profit must disappear. The governing 
class (we are presuming, quite contrary to the facts, that a 
governing class could maintain such conditions) would simply 
appropriate what wealth they chose. But if this is so, what con- 
ceivable advantage would they derive from unnecessary con- 
sumption by the lower-grade workers, involving unnecessary 
production ? Here, obviously, Mr. Huxley has simply taken one 
of the characteristics of the particular organization of mechan- 
ized production in which he lives, and applied it to mechanized 
production in general. 

There is another contradiction in Brave New World, which is 
similarly significant. We are asked to believe in the production of 
masses of low-grade workers, carefully rendered half, third and 
a quarter witted, the " Gammas," " Deltas " and " Epsilons," 
as they are called, to perform necessary manual work. But at the 
level of scientific knowledge which Mr. Huxley depicts, the 
necessity for anything like this amount of manual labour would 
have long ago disappeared. It would be far more economical to 
produce mechanical automata to undertake these tasks than to 
breed, by the elaborate and expensive process which he des- 
cribes, these pre-natally (or, pre-" decantingly ") conditioned, 
and highly perishable, workers. Again, of course, what Mr. 
Huxley is really thinking of is the mental and physical deforma- 
tion of its manual workers which capitalism perpetrates here 
and now. And if he had said this, and shown that no degree of 
scientific adyfltu^xpfcss, panly 



affairs, but would ^her tend to make^ ^ ^ for ^ 
would have written a clear a profit-making class 

Huxley, it is not science in ^^^ of P the worke rs ; it is 
which must deface the nun a conceived of the possibility 
science in general. For he ^^ wve[ applie d his mind to the 



necessary to 
Since Mr. 



LITERATURE 215 

cannot possibly share the latter's obdurate, if now somewhat 
frayed, optimism about the effects of the growth of scientific 
knowledge under the existing social order ; since he cannot 
help seeing the ever-sharpening contradiction between modern 
science and a system of society based upon the private owner- 
ship of the means of production ; and since he does not imagine 
a dassless society, he comes to the conclusion that the contra- 
diction will be solved by a pooling of the ownership of the means 
of production, not amongst all the members of the community, 
but amongst the members of the ruling class. (We shall examine 
this conception in a later chapter and show its inherently self- 
contradictory character.) Mr. Huxley, however, is not blind to 
the consequences of the present appropriation, and consequent 
distortion, of science by a class. He sees the loathsome sort of 
world which it produces. Hence, his mounting pessimism. 
Hence, his tendency, which will no doubt increase, to join the 
anti-scientists, the machine wreckers. For Brave New World is, 
in effect, an anti-scientific tract. Its whole influence must be to 
make people feel that if this is whither science is leading them, 
then science must be put a stop to. (One might be tempted to 
hope that this new anti-scientific tendency might gain the 
mastery in the great capitalist states : that they should in fact 
take Nature's advice and, imitating the inhabitants of Erewhon, 
destroy their machines. For then, indeed, the balance of power 
would tip very quickly in favour of the ever-growing scientific 
power of the communist sixth of the world. It is to be feared, 
however, that capitalism will always retain an affection for one 
science at any rate, the science of war.) 

These three writers, Lawrence, Proust and Huxley, all exhibit 
at least one characteristic in common. They all take the tragic 
view of life. They are inheritors of the great tradition of litera- 
ture. They are undeceived as to the realities of man's situation 
in the universe. And yet, as we noticed above, the reader cannot 
help feeling that there is some other and far less estimable ele- 
ment in their pessimism ; he detects something febrile, at its 
worst, something petty in their attitude to life. It is as if there 
was some element of confusion, of unconscious deceit indeed, 
about the picture of human life which they paint. This element, 
it has been submitted, arises from the fact that they all confuse 



1 THE COM1KG STRUGGLE FOR POWER 

the unavoidable tragedies of human existence in general, with 
the entirely evitable, but at present growing and deepening, 
tragedies of a specific system of society in a period of decay. 
They make no effort to show that the present horrible frustra- 
tions, deformations and agonies of men are due to the fact that 
they are for the most part still living under the degenerating 
capitalism of the twentieth century. Moreover, since by this 
suppression they in effect preach that ills that are quite curable 
by a change in the character of society are man's hard, inevit- 
able lot against which it is futile to kick, they serve a very useful 
purpose to the governing class. And this is the reason for that 
element of inferiority which we all feel about them, in spite of 
their, in many ways, actually superior intelligences, as compared 
with the writers of the vigorous youth and of the high noontide 
of capitalism. For since they do not extricate themselves from 
present-day society, since they are unable to stand outside of it, 
conceiving of a new basis for human life, they are themselves, 
inevitably, infected by their surroundings of decay. 1 

Even now, however, we have not entered the domain of pure 
literature. These regions are guarded by the poets, and these 
guardians defy the investigator. Their territory is, and must ever 
remain, they tell us, a separate and secret island of escape, with 
no contaminating contacts with the mainland of human affairs. 

And if an Englishman ventures to call in question any of the 
claims of poetry, he does so with trepidation. For poetry, for 
" pure " literature in its widest sense, has been by far the 
greatest aesthetic achievement of the English. Laggards and 
dunces at the plastic arts, heirs to a tradition of native music 
which somehow died before it had had the opportunity to come 
to maturity, the English have century after century poured 
their fancy into a golden stream of poetry, which is without 
rival in the world. For the English nature, like that, indeed, of 
all the major peoples of the world has contained, as well as its 

1 Lenin remarks that Tolstoy owes his immense stature in literature to the fact 
that although he had no conception of any other society, though he sought 
desperately and futilely for a basis for such a new society amongst the peasants* 
to the very end he refused to accept hi any way, theoretically or practically, the 
existing life of his times, but always stood outside it. To Lawrence alone, of the 
three writers we have considered, and to him only in a more limited degree, could 
these words be applied. 



LITERATURE * 21T 

predominantly extrovert strain, an element of profound, subtle 
and dreaming contemplation. Keats was as typical an English- 
man as Wellington D. H. as T. E. Lawrence. From Chaucer to 
Shelley the stream flows unbroken. Then it begins to trickle. 
The nineteenth century produced its great poets ; men as gifted 
as their ancestors. Yet somehow they all, Tennyson and Brown- 
ing, Arnold and Swinburne, failed to establish their place in the 
essential tradition. And as the old century closed and as the new 
one began, a new and strange thing happened. It was not that 
poets failed to appear : it was not, principally, that their quality 
deteriorated. It was rather that they began to shrink in size. 
The poets were there all right, but they became smaller and 
smaller till now most of them are hardly visible to the naked 
eye. Beautiful and satisfying individual poems are occasionally 
still written : but they appear at longer and longer intervals, and 
with, it seems, greater and greater difficulty : more and more 
tortured efforts are necessary to write them, and one or two 
short books are the most that any individual poet achieves. 

Mr. A. E Housman is the very last of the English classical 
poets : and one of the most typical. But what a little one I Two 
tiny volumes are all that he has written. And the second is 
called, conclusively, Last Poems. The lovely and sombre verses 
which it contains are indeed ultimate in a larger sense than that 
they are all that we can expect from Mr. Housman. They are 
the last streamlet of that glorious river of verse, in which the joy 
of man in nature, a simple and yet satisfying philosophy, and 
an abounding, untamed fantasy have mingled to refresh the 
lives of successive generations of Englishmen. 1 And if we are 
apt to prize Mr. Housman above his real worth, it is because : 

No spring, nor summer beauty hath such grace 
As I have seen in one autumnal face. 

True, a new school of poets has arisen in the last decades. They 
are, however, in spite of their deep appreciation of, and erudition 
i&, the English classics, a new species, sharply different from 
any which have ever appeared in England before. They admit to 
the impossibility of the old tradition of poetry. This is a place 

1 Thomas Hardy, and even Bridges, have a few lines in the great tradition* 
So has Mr. Davies and Mr. De La Mare. These are but lingering drops. 



218 THE COMING STRUGGLE FOR POWER 

totally inappropriate for a discussion of their work. 1 The most 
considerable product, however, of this school, Mr. T. S. Eliot's 
poem The Waste Land, is such an extraordinarily vivid example 
of the reactions of a sensitive man to the decay of the whole 
system of society into which he has been born, that it cannot 
be overlooked. It was published in 1922, and was, therefore, 
written at the most acute point of the post-war crisis of capi- 
talism. The Waste Land is the most considerable poem produced 
in English in our day. It expresses the whole agonizing disin- 
tegration of an old and once strong social system with the 
greatest poignancy. The sad purpose of the poet is perfectly 
served by the poem's very form. It has a lack of formal elo- 
quence ; it has queer, haunting, broken, almost furtive, numbers 
which are for ever rising towards a passage of classic eloquence 
and are for ever falling back before they have achieved it ; which 
are scattered into fragments, dismembered into snatches of song, 
as if they were themselves disenchanted of the possibility of all 
achievement and completion anywhere, any more, on the whole 
earth. Naturally, there is a more personal side to the poem. In 
many earlier, and far inferior poems, Mr. Eliot had shown him- 
self not much more than a typical New England Puritan, 
lamenting delicately over lost opportunities. 2 Mr. Prufrock 
(prudent frock ?), his favourite impersonation of himself, is 
little more than this. And it is, of course, quite legitimate to 
identify The Waste Land with this side of Mr. Eliot's character 
instead of with contemporary society. And yet, as a matter of 
fact, what the poem itself tells us is quite simply that the Waste 
Land is London. (And the poem will always remain supremely 
moving to Londoners on that account.) London, and the life 
being led to-day by different classes of people in London is quite 

1 Mr. Max Eastman has written a sensible study of what the modern poets are 
and why they write as oddly as they do. He comes to the conclusion that when 
a mountain of pretentious nonsense has been stripped off them, some of their 
work does really represent an attempt to create the only kind of literature which 
willy in the immediate future be possible. His account of the literary man's 
reactions both to the growth of science and to the ever-increasing crisis in capital- 
ism is valuable. See his book, The Literary Mind. 

8 Mr. Eliot's feverish erudition is characteristically American. In The Watte 
Lend, for example, he does not so much use the accumulated culture of the old 
world, as ransack it. Yet perhaps it is just because he is an American that he 
has had the courage and energy to write the epitaph of the culture of the old 
world. 



LITERATURE * 219 

straightforwardly and directly the subject of almost every one 
of the five sections of the poem. Even towards the end of the 
first introductory section, after a little comment ^on the " stony 
rubbish " of contemporary European life, we come to the first 
invocation of the city 

Unreal City 

Under the brown fog of a winter dawn. 

A crowd flowed over London Bridge, so many, 

I had not thought death had undone so many. 

The second part is the simplest and most direct of all. It con- 
sists entirely of two sections contrasting the lives of the rich and 
the poor, and finding them both hideous. It begins with a pas- 
sage of sustained eloquence describing an exquisite setting for 
the life of a rich woman, and then breaks up sharply into dis- 
membered futility. 

" My nerves are bad to-night. Yes, bad. Stay with me. 
Speak to me. Why do you never speak. Speak. 
What are you thinking of? What thinking ? 
What? 
I never know what you are thinking. Think." 

I think we are in rats^ alley. 
Where the dead men lost their bones. 

" What is that noise ? " 

The wind under the door. 

" What is that noise now ? What is the wind doing ? " 
Nothing again nothing. 

"Do 

You know nothing ? Do you see nothing ? Do you remember 
Nothing ? " 



" What shall I do now? What shall I do?' 9 
" / shall rush out as I am, and walk the street 

With my hair down, so. What shall we do to-morrow f 

What shall we ever do?" 

The hot water at ten. 

And if it rains, a closed car at four. 



390 THE COMING STRUGGLE FOR POWER 

Then comes the life of the poor the conversation between 
the women as the pub is closing. 

When LiVs husband got demobbed, I said 
I didn't mince my words, I said to her myself, 

HUBBY UP PLEASE IT*S TIME 

Now Albert's coming back, make yourself a bit smart. 

He'll want to know what you done with that money he gave you 

To get yourself some teeth. He did, I was there. 

You have them all out, Lil, and get a nice set, 

He said, I swear, I can't bear to look at you. 

And no more can't I, I said, and think of poor Albert. 

There follows a long, terrible catalogue of the premature ageing 
of the women of the working class, enforced by poverty, ignor- 
ance, clumsy abortions and the like. The section ends with a half 
ironic, half tragic use of Ophelia's farewell. 

HUBRY UP PLEASE IT'S TIME 

Goonight Bill. Goonight Lou. Goonight May. Goonight. 

Ta Ta. Goonight. Goonight. 

Good night, ladies, good night, sweet ladies, good night, good night 

Part III. is all London again. The Thames in Autumn gradu- 
ally clearing itself of the debris of the river parties 

The nymphs are departed. 
And their friends, the loitering heirs of city directors. . . . 

And then the invocation again. 

Unreal City 

Under the brown fog of a winter noon 
Mr. Eugenides, the Smyrna merchant 
Unshaven, with a pocket full of currants 
C.i.f. London : documents at sight. ... 

There follows the famous scene of lower middle-class life, in 
which the bored, tired, typist is, meaninglessly, futilely and 
therefore horribly, possessed after tea in her bed-sitting-room 
by the " small house-agent's clerk," " carbuncular." 



LITERATURE 221 

At this point appears the poet's romantic longing for a less 
arid and intolerable past. We get the memory of London as it 
had been when Elizabeth and Leicester sailed the Thames, and, 
with Part IV., of the days when tragedy was at any rate beauti- 
ful and fertile, the exquisite short lyric of the "Death by Water" 
of Phlebas the Phoenician. 

Finally, in Part V., we have repeatedly expressed the falling 
apart and dying of everything that the poet knows. 

He who was living is now dead 
We who were living are now dying 
With a little patience. 

Falling towers 

Jerusalem Athens Alexandria 

Vienna London 

Unreal. 

London Bridge is falling down falling down falling down. 

There are, of course, other elements in the poem. There is the 
theme, as we have suggested already, of Mr. Eliot's personal 
predicament, and there is the theme which foreshadows the 
mystical solution which he has since found for both his own 
problems and society's. But perhaps such quotations as have 
been given are sufficient to demonstrate beyond argument the 
overruling influence of current social decay on the first poet of 
the day. 

Since writing The Waste Land Mr. Eliot, encouraged no doubt 
by the 1922-1929 period of capitalist recovery, has left the 
despair of the Waste Land behind him and taken up the typical 
position of a highly intellectual reactionary. He has become, he 
tells us, "a classicist in literature, a royalist in politics, and anf 
Anglo-Catholic in religion." (Why cannot he be, at any rate, 
a real Catholic ? Becoming an Anglo-Catholic must surely be a 
sad business rather like becoming an amateur conjurer.) 

The other great figure of contemporary letters is Mr. James 
Joyce. Mr. Joyce is undoubtedly a great poet, whose gifts would 
be accounted precious in this or any other age. Mr. Joyce's work 
remains, and will I imagine always remain, memorable. It will 
mark as aptly the end of that vast literature in English which 



882 THE COMING STRUGGLE FOR POWER 

was the chief achievement of the English-speaking men of the 
last five centuries, as Proust's novel marks the end of the cor- 
responding French tradition. For Ulysses is not only a sort of 
summary of English literature (it contains conscious imitations 
of almost all the principal English prose styles) : it is also the 
antithesis of the spirit of English letters. It marks the end of 
lyricism in verse, and of clear, simple, logical statement in 
prose. It has the same qualities of synthesis, of scholasticism as 
the work of the great medievalists. Mr. Joyce's playing with 
the methods of all previous authors, the very plan of Ulysses 
itself with its incredibly elaborate parallelism to Homer, and 
above all the actual use of cryptograms in his later work, as 
when he weaves the names of five hundred rivers into his 
" Anna LiviaPlurabelle," are irresistibly reminiscent of the medi- 
evalists, and still more of the Byzantines. All this has nothing 
whatever to do with the tradition of the great writers of the 
epoch of self-confident capitalism. Mr. Joyce's work indelibly 
marks the exhaustion of a whole range of possibilities. To say 
this is naturally to praise, not to disparage it. It is just the fact 
that Mr. Joyce has realized, more clearly than anyone else per- 
haps, the utter futility, the aesthetic impossibility, of going on 
writing in the old way, which makes him the profoundly signi- 
ficant figure which he is. For it is Mr. Joyce's superb achieve- 
ment that he has succeeded in breaking through into a new 
kingdom in which literature and poetry may still reign supreme. 
There is no preferable method, indeed there is no other method 
at all which can tell us so much about the almost infinitely 
complex and, as yet, unclassifiable, interdependencies of human 
existence ; the infinitely interwoven " point events " of, say, 
twenty-four hours of a few human lives, as does the poetic 
method which Mr. Joyce has discovered in Ulysses. He has suc- 
ceeded for the time, at any rate, and in one particular respect, in 
reasserting the old high claim of literature to be the prime 
method of enriching our knowledge of the external world. In 
this sense, Mr. Joyce, in spite of the extreme Byzantinisms of 
his later works, is less of an end and more of a beginning than 
Proust. But if his work is a beginning as well as an end, it is the 
beginning of something which has little or nothing to do with 
the culture of the last five hundred years of Europe. 



LITERATURE 228 

A la Recherche du Temps Perdu and Ulysses stand like massive 
boulders marking the end of a long tradition, blocking the old ! 
road, and pointing, not very certainly, in some new direction. If 
it is possible that there can be another major work in the old 
tradition, in the classical literature of the capitalist class, it 
must come from America. 1 

One more poet of the departing epoch remains for our con- 
sideration. And it is significant that Nietzsche, the last world 
poet of capitalism, died over thirty years ago. The most per- 
ceptive men of each phase of a civilization often express in their 
work, not so much the prevailing consciousness of their contem- 
poraries, but the consciousness of that phase of their culture 
which will immediately follow them. Their greater insight seems 
to enable them to anticipate the reflections in consciousness 
which social tendencies, still only nascent in the actual world 
of things, will produce, when these tendencies have come to 
maturity. 

Thus Nietzsche expressed not so much the ideas appropriate 
to the still comparatively pacific capitalism of the eighteen- 
eighties, but rather the ideas of the last desperate and tragic 
phase of the capitalist-imperialist system in which we live to- 
day. (Naturally his works were almost incomprehensible to all 

1 In this connection it would be tempting to discuss the work of Mr. Faulkner, 
the young novelist of the American Southern States. His remarkable book, 
Sanctuary, depicts a state of violent social disintegration a kind of rottenness 
developed before maturity has been even approached, that more vividly than 
any other book of our day makes one realize how comparatively short the noon- 
tide of American capitalism is likely to be. One lays Mr. Faulkner's book down 
with the conviction that this state of things is already the prolegomena to com- 
munism. Naturally Mr. Faulkner's own attitude is quite unpolitical. He is merely 
obsessed by the intolerable horror of what is. Politically speaking, he is the 
American equivalent to Dostoievsky. Yet from the point of view of literature 
the comparison, in spite of Mr. Faulkner's real talents, is just a little absurd. 
Will the American capitalist class ever have the time to find authors to express 
the tragic contradictions of the Republic's present period, which are no less 
grandiose in scale than the contradictions of nineteenth-century Russia, with 
the adequacy of the great Russian authors ? 

There is far less chance of any work on the grand scale in England. As a matter 
of fact, quite the best and in many ways actually the most accurate account 
of present-day English society, written by an author with something of Mr. 
Faulkner's capacity for still being appalled by his surroundings, is contained in 
Mr. Evelyn Waugh's two humorous books, Decline and Fall and Vile, Bodies. 
After writing these books, Mr. Waugh had clearly only three alternatives open 
to him. He could either commit suicide, become a communist, or immure himself 
within the Catholic Church. He chose this last (and easiest) alternative. As we 
come to consider these younger writers our choice of examples becomes almost 
wholely arbitrary, however. 



924 THE COMING STRUGGLE FOR POWER 

but a handful of men for twenty years or so after their publica- 
tion.) The same thing is true of Marx himself. The conditions 
for the fulfilment of his prognosis of the overthrow of capitalism 
by the working class are being fulfilled, not in 1848, but in the 
first half of the twentieth century. The minds of the most excep- 
tionally endowed men seem, as it were, to be able to move faster 
than time, and swimming up the stream as it runs ceaselessly 
past us, to come back to us with news of events which will soon 
come down the current and be upon us. 

Plekhanov called Nietzsche " the arch-bourgeois," and if he 
meant that the poems of Nietzsche (and all his most import- 
ant works are essentially poetic) are some of the greatest ever 
written by any capitalist author, he was right. The supreme effort 
of the theorists of the European capitalist class at systematic 
synthesis is, no doubt, represented by the works of Hegel. But 
Hegel's embittered opponent Nietzsche achieved the last and 
one of the greatest of their flights in the domain of the human 
imagination. Indeed, Nietzsche's work was the " limiting case " 
of poetry. For he himself stood half outside poetry, deploring 
the fact that he was a poet (" and verily I am ashamed that I 
have still to be a poet "). He was already unconsciously hungry 
for the ascertained fact. 

Let us consider his central doctrine, the doctrine of the eternal 
return of all things. It may be instructive to compare this pessi- 
mistic and mystical doctrine with the Marxian dialectic. The 
dialectic is a sort of social X-ray apparatus, enabling us to see 
the very bones of human society ; and to see how they move. 
Once we are in possession of this hypothesis, we see that the 
history of man has been no smoothly flowing river of progress. 
An undeniable ebb and flow ; complex forms of reciprocating 
movement, in which a whole epoch is succeeded not by another 
epoch which produces the former's tendencies to their conclusion 
in infinity, but which starts a movement in the opposite direc- 
tion ; within these main epochs innumerable minor movements, 
backwards and forwards ; the subject ; the negation of the sub- 
ject ; and then the negation of the negation of the subject 
these are the undeniable characteristics of the human past. Two 
men of the last century, Hegel and Marx, together discovered 
this, the deeply buried and gigantic pattern of history* 



LITERATURE M5 

Hegel first described the phenomenon. He presented it more 
or less mystically. For him, there was no very clear reason why 
history was made up of this particular pattern of events. For 
him " the idea," by which he meant in the last resort, people's 
opinions, coming presumably either from nowhere, or from God, 
was the motive force of the whole process. But since Hegel's 
dialectic was at any rate dynamic even though mystically 
dynamic ; since there was a prime mover, even though a distant 
and divine one, the whole process was not merely circular. The 
negation of the negation did not bring you back just where you 
started from as it would in formal logic. Human society has 
evolved, Hegel agrees. Each phase, though antithetical to the 
last, has not been a mere repetition of the one before that. 
Elements, achievements, of the previous phase become em- 
bodied in its successor. Each successive phase is a correction of 
the former one, rather than its blank negation. There is a pro- 
gressive growth in the complexity, in the richness, of the forms 
achieved. The movement is that of a spiral rather than that of a 
circle. It is true that for Hegel the whole process comes to a dead 
stop with the Prussian nineteenth-century state. The historical 
process, he taught his disciples, having created perfection had 
finished its work. Up till that point, however, the process had 
been genuinely dynamic. 

Marx supplied a real instead of an ideal prime mover for the 
whole construction. He showed that human societies have de- 
veloped dialectically because of the interactions between the 
continually changing methods by which men have performed the 
most essential business of their lives have kept alive have, in 
a word, produced, and the tendentiously static forms of the 
societies which they have organized. Thus, the new methods of 
production have continually had to break down old societies. It 
has been to clear the ground for the construction of new social 
forms compatible with the new methods of production. Thus 
Marx stood the dialectic upon good, sound, material feet and, 
as he says, made it " a scandal and an abomination to the 
bourgeoisie and its doctrinaire spokesmen, because, while 
supplying a positive understanding of the existing state of 
things, it, at the same time, furnishes an understanding of the 
negation of that state of things, and it enables us to recognize 

Pp 



226 THE COMING STRUGGLE FOR POWER 

that that state of things will inevitably break up ; it is an 
abomination to them, because it regards every historically de- 
veloped social form as in fluid movement, as transient ; because 
it lets nothing overawe it, but is in its very nature critical and 
revolutionary." 1 

In the case of Nietzsche's doctrine of the eternal return of all 
things, however, there is neither the divine prime mover of 
Hegel nor the real one of Marx. Nietzsche did not believe in 
Hegel's disguised deity ; and yet he had not the slightest in- 
terest in changes in methods of production. It would not be 
true to say that he did not realize that methods of production 
determined the character of every civilization. On the con- 
trary, his classical studies showed him quite clearly that slavery 
was the necessary basis of all the ancient civilizations. And he at 
once concluded and preached that some form of slavery for the 
mass of mankind was the necessary basis of all culture. (And 
if you grant him the implied hypothesis, namely, that methods 
of production have not changed since the days of Pericles, he 
is in a sense right.) For Nietzsche seems never to have noticed 
the existence of a machine in his whole life. A South German, 
from what was then one of the most technically backward parts 
of Europe, he seems to have recognized no improvement in the 
human command over natural forces, since the introduction of 
agriculture at any rate. 

Nietzsche, then, rejected both of the motive principles of 
history. Men were neither pulled forward by a God more or 
less philosophically disguised nor were they impelled to 
elaborate their social relations by the growth of what we have 
called their own comprehensive command over their environ- 
ment. And yet Nietzsche saw through, and exposed, with 
unmatched vigour of bitter raillery, the shoddy, unhistorical, 
impoverished philosophy of nineteenth-century liberalism. He 
knew perfectly that, whatever else was the pattern of history, it 
was not a straight line of automatic and uninterrupted progress. 
What other view of human history could he take, therefore, than 
the terrible one which he announced ; the view that it was the 
destiny of men ceaselessly and eternally to tread a circle, in 
which the past was always but the mirror of the oncoming 
1 Preface to the second German edition of the first volume of Capitol. 



LITERATURE 227 

future : in which past and future were but the deceptive sectors 
of a circle round the circumference of which the human race 
must for ever, wearily run its race ? 

In fact, the doctrine of the eternal return of all things is a 
static, and therefore pessimistic, despairing version of the great 
truth that the problems which history presents to men recur and 
recur. For it fails to recognize that they recur to men who may 
be better equipped to deal with them. Nietzsche, however, since 
he was a man of a culture which the next turn of the wheel must 
supersede, could not comprehend this. His discovery of the 
ineluctable conditions of destiny caused him the utmost agony, 
for he mistook the doom of his particular category of civilization 
for the doom of civilization itself. 

And yet this was only one side of Nietzsche. Side by side 
with the doctrine of the eternal return of all things and, in spite 
of all denials, contradicting it flatly, there is the doctrine of the 
superman. Super to what, we enquire ? And the only answer 
must be that the superman is above just precisely this recur- 
rence of destiny : that he is superman just in so far as he is freed 
by knowledge and conscious power from the necessities of fate. 
For, as Engels wrote, freedom is the knowledge of necessity. 
Thus, Nietzsche, the last philosopher-poet of European 
capitalism, sometimes reached out unconsciously beyond the 
limitations of his time and place. To use his own terminology, 
" he reached beyond himself." 

Nietzsche has been for many European intellectuals, especially 
for English intellectuals, with their cloying tradition of 
liberalism, a bridge which had to be crossed before they freed 
themselves of illusion. He has been a guide to the tragic view 
of life. For it is impossible to achieve the ultimate, though 
always caustic, revolutionary optimism unless the mind has 
first been purged of the facile optimism of nineteenth-century 
liberalism. The necessity of an objective force incarnated by a 
specific social class in order to achieve a new type of society, 
the futility of supposing that sweet reasonableness can solve 
the iron contradiction of our extant social order, these things 
cannot be understood unless some cauterizing flame has passed 
over the mind. 

Friedrich Nietzsche was the last major poet of the culture 



228 THE COMING STRUGGLE FOR POWER 

of the capitalist class. He reflected the violence and despair of 
the final imperialistic phase of capitalism. But at the same time 
he shattered for ever the shallow hypocritical optimism of 
capitalism's earlier period. And, thus, with his destructive 
vigour, he unconsciously performed a service to the nascent 
forces of the workers, who were, and still are, striving for a 
complete consciousness of their own mission. 



V. R. NARLAi 



PART IV 
THE FUTURE OF CAPITALISM 



CHAPTER XII 
Imperialism 

THE first three parts of this book have consisted of a survey of 
the present difficulties of carrying on the capitalist system. It 
has been submitted that these difficulties are insuperable. 

The rest of the book is devoted to a discussion of what the 
future has in store for us. We shall be forced to leave to some 
extent at any rate, the firmer ground of fact and to enter the 
territory of speculation. But just in so far as our subject matter 
necessarily becomes more abstract and debatable, we shall 
strive to make our treatment of it more concrete and realistic. 
Thus, it is not by any means intended to embark upon a series 
of academic and theoretical speculations as to what kind of 
social system would be a desirable successor to capitalism. On 
the contrary, we shall fix our attention on those forces in our 
present society which are obviously and visibly trying to remould 
it. We shall in practice find ourselves largely engaged in describ- 
ing and estimating the main political trends of our time. 

This chapter, and the two which follow it, discuss the ques- 
tion of the immediate future of capitalism. For capitalism, 
although dying, is not yet dead. True, with the establishment 
of the Soviet Union, the period of capitalism as an almost uni- 
versal world system came to an end : and at any time another 
area of the world may be lost to the capitalists. At the same 
time, it is clear that in some parts of the world, capitalism will 
continue to exist for a short period. And it is the character of 
this ultimate period which we shall here discuss. 

Now capitalism has for many years been in what is called 
its imperialist phase. It will be our task to show that this is its 
ultimate phase, and that its only future will consist in the work- 
ing out of the last possibilities of imperialism. Let us first, then, 
establish a definition of imperialism. Lenin devoted a close 
study to the conditions which must arise in the closing stages 
of capitalism's existence. He described the efforts of the 
capitalists to perpetuate their domination of society during the 
period when their own characteristic system, with its depen- 
dence upon the mechanism of the market, is falling under them. 



282 THE COMING STRUGGLE FOR POWER 

Lenin described their reactions in a book written in 1916, which 
he called Imperialism. His conclusion is that the last phases 
of capitalism " to some extent cause the capitalists, whether 
they like it or not, to enter a new social order, which marks the 
transition from free competition to the socialization of produc- 
tion. Production becomes social, but appropriation remains 
private. The social means of production remain the private 
property of a few." 

Lenin implies that the scale of capitalist production has 
become so enormous, the great monopolistic trusts so vast, that 
it is no longer possible to deny that production has become to a 
large extent a process carried on, not by any individuals, but 
by society as a whole. And yet, at the same time, the capitalist 
class, which is still in power, makes desperate efforts to main- 
tain the legal system of private property. The contortions of 
the present policy of all the great capitalist states are nothing 
but the efforts of the capitalists to accomplish the impossible 
task of making private property fit social production. The only 
result which such efforts can have, is, of course, the creation of 
ever-extending monopolies. Hence, as Lenin puts it, the shortest, 
most epigrammatic, definition of imperialism is to say that it is 
" the monopoly stage of capitalism." 

Such a definition does not accord with the ordinary popular 
conception of imperialism. We are apt to think of imperialism 
as consisting in the annexation of colonies. Or, again, more 
especially in the case of vast and long-established empires, such 
as the British, imperialism means for many people a sort of 
u Empire spirit." (For Mr. H. G. Wells' modern imperialism 
was, we saw, " a vague exaltation.") This " Empire spirit " is 
fermented not so much in order to acquire new territories, as 
to retain, and more intensively exploit, existing colonies. And, 
undoubtedly, the acquisition and retention of undeveloped 
territories, as their preserves for monopolistic exploitation, by 
the groups which control the great powers, is an important 
objective of the policy of all modern states. But then such 
annexations were undertaken by older forms of the state. 
Eighteenth-century France and Britain, which had not begun 
to be imperialist powers in the modern sense of the term, were 
avid enough for. colonies. And, even in the nineteenth century, 



IMPERIALISM 288 

when the great " grab for Africa " was taking place, the full 
characteristics of modern imperialism did not appear. The 
annexations could go on without arousing such extreme and 
immediate collisions between the interests of the great powers 
as are occurring to-day. The period of imperialism proper, as 
we experience it to-day, had not arisen. It had not arisen because 
in the last century there were still a sufficient number of empty 
spaces into which the capitalist empires could expand, while in 
this century the world is almost full up : one empire can only 
expand at the expense of another. Every part of the undeveloped 
world is somebody's colony or protectorate, mandated territory 
or sphere of influence. Thus, on Lenin's definition, the epoch of 
imperialism does not begin until " the partition of all the terri- 
tories of the earth amongst the great capitalist powers has 
been completed." 

For, when Lenin said that imperialism was " the monopoly 
stage of capitalism," he was not thinking of monopoly in con- 
nection with the creation of trusts and combines alone : he was 
also thinking of monopoly in the annexation of colonies. His 
point is that imperialism, as a distinct regime, does not begin 
until the whole earth has become the monopoly of one or other 
of the capitalist empires. This is how he puts it : 

" Such a definition [his short definition, that is] would in- 
clude the essential feature ; for, on the one hand, finance- 
capital is the banking capital of the few biggest monopolist 
banks, fused with the capital of the monopolist groups of 
manufacturers ; and, on the other, the division of the world 
is a transition from a colonial policy, ceaselessly extended 
without encountering opposition in regions not as yet appro- 
priated by any capitalist power, to a colonial policy of mono- 
polized territorial possession the sharing out of the world 
being completed." 1 

1 For the reader's convenience, it may be well to give Lenin's long definition 
of imperialism in full : 

" (i.) The concentration of production and capital, developed so highly that it 
creates monopolies which play a decisive role in economic life. 

" (ii.) The fusion of banking capital with industrial capital and the creation, 
on the basis of this financial capital, of a financial oligarchy. 

" (iii.) The export of capital, which has become extremely important, as dis- 
tinguished from the export of commodities. 

" (iv.) The formation of international capitalist monopolies which share out 
the world amongst themselves. 



284 THE COMING STRUGGLE FOR POWER 

Imperialism, then, is monopoly capitalism in a double sense. 
It is capitalism in a stage of development in which monopolies 
play a decisive part in production. And it is capitalism in a stage 
of development in which every part of the earth has become the 
monopoly of one or other capitalist empire. 

Let us see how the drive towards monopoly is working itself 
out, both in actual fact, and in the heads of the capitalist 
theorists, who are busily rationalizing the process. Let us com- 
pare, and contrast, the way in which monopolies are actually 
achieved, and the way in which the process is described by the 
theorists of monopoly capitalism (of imperialism, that is). 

Now we have already (in Chapter III) given some account of 
the rise of monopolies, which inevitably cut athwart the freedom 
of the market, just so soon as sufficient capital had been accumu- 
lated for large-scale production. We saw that the rise of 
monopoly was no smooth or automatic process. On the con- 
trary, it was achieved by an incessant and intensive struggle 
between different capitalist organizations. The process was, 
typically, one of the swallowing of small firms by bigger ones, 
of the strangulation and subsequent buying up, at a very low 
price, of independent producers, by some great industrial or 
banking organization. 

Such a perpetual war between rival capitalist interests is 
clearly of the very essence of the system. Here, however, we 
come to a seeming paradox. For the capitalist class as a whole 
has obviously, on occasion, a strong internal unity. It is clearly 
necessary to it that it should be able to present an effectively 
united front in at least two directions : it is necessary that it 
should be able to face and fight the demands of the wage- 
earners, of the working class ; and it is necessary that it should 
be able to show the same unity against the capitalist class of 
another and rival state. And, as we all know, it does in fact 
show a high degree of unity in both these directions. 

" (v.) The territorial division of the whole earth completed by the greatest 
capitalist powers. 

'* Imperialism is capitalism in that phase of its development in which the 
domination of monopolies and finance-capital has established itself ; in which 
the export of capital has acquired very great importance ; in which the division 
of the world among the big international trusts has begun ; in which the partition 
of all territories of the earth amongst the great capitalist powers has been com- 
pleted.*' 



IMPERIALISM 285 

But does this undeniable unity in face of the common enemy 
entirely suppress, even while the occasion for it persists, the 
continual struggle of group against group within the capitalist 
class itself ? How does it, in particular, affect the ever-growing 
drive towards monopoly, towards the subordination and the 
suppression of weaker capitalist groupings by stronger and more 
vigorous rivals ? With this question we come to the heart of the 
matter. Nor can there be any doubt as to the answer. 

The necessity for preserving a united front against either the 
workers at home or against rival capitalists abroad is itself used 
by the dominant and successful groups within capitalism to 
further their own interests at the expense of their weaker 
brethren : is used by the great trusts, and the great trustified 
banks, first to weaken and then absorb this and then that cate- 
gory of independent producers. Nor do the dominant groups 
neglect to use for this purpose the machinery of the State itself. 
A classical example may be found in the measures of Govern- 
ment control which were applied to British industry during the 
last war. Now it is quite true that these measures, by which the 
whole of the affairs of almost every British producer were laid 
open to the Government (and the Government was at that time 
proud to announce that it was composed of " business men " 
of the great capitalists, that is), were genuinely necessary for the 
conduct of the war. Unless the British capitalists had achieved 
this degree of internal unity, they would very probably have 
been destroyed by their German rivals. But this does not alter 
the fact that the information, and the measures of actual con- 
trol, which were thus obtained were used at the end of the war, 
by the great trusts and by the trustified banks to force through 
the first big drive for the consolidation and monopolization of 
British industry : to squeeze out the independent producers, and 
to gather together the threads of industrial power into a few 
hands. 

Not that the process is even now complete. The independent 
producers, especially in Britain, have put up a stubborn fight. 
In Lancashire, for example, we have witnessed what one is 
tempted to describe as the Thermopoly of the British cotton 
masters. It is astonishing to what lengths these men, the heirs 
of the greatest tradition of independent capitalist production in 



286 THE COMING STRUGGLE FOR POWER 

the world, have gone, in order to prevent themselves from being 
encircled by the Lancashire Cotton Corporation that long 
groping tentacle of the Bank of England, The necessity for 
unity in war only began the process by which the great barons 
of British capitalism are seeking to aggrandize their power and 
wealth at the expense of the whole class of smaller capitalists. 
But what war began, crisis can continue. Just as in 1914-1918 the 
necessity of unity against the German capitalists could be used 
as a shepherd's crook with which to gather the independent 
producers into the pens provided for them by the trusts and the 
banks, so now the no less evident necessity for unity against the 
workers during the crisis can be used for the same purpose. And 
used it is. Slowly but surely the drive towards monopoly goes 
on. The competitve struggle is as sharp as ever within the British 
system. But it is becoming a struggle between ever bigger and 
ever fewer competitors. The trusts and banks are like great pike 
in a fishpond. And, in the British industrial fishpond, many of 
the choicest minnows have been eaten ; the pike are turning 
angry eyes on each other are apt to quarrel as to who shall get 
the best remaining morsels. 

This is how capitalist monopolies are created. Let us now 
look at the descriptions of the process which are given us by the 
contemporary theorists of imperialism. For just as in the war 
period the independent producers were delivered over to the 
trusts in the name of national defence, so now the survivors are 
to be rounded up under the cover of the most scientific policies. 
The new watchwords of the ruling class are well worth attention 
from this point of view. " National Planning," " Empire Plan- 
ning," " Organized Capitalism," are the phrases on the lips of 
their most up-to-date theorists. Now it would be the greatest 
mistake in the world to take these phrases at their face value : 
to suppose that they represent disinterested suggestions^ for the 
solution of the crisis. But, at the same time, it would be equally 
erroneous to dismiss them as meaningless. They are, in fact, the 
expression of the latest phase of the struggle of the great British 
monopolists to extend their grip over the British economic 
system. 

For, naturally, it is only the representatives of the monopo- 
lists, of the bank and trust directors, who hold these theories : for 



IMPERIALISM 287 

it is in their favour that the monopolies are to be created/There 
exists a minority opinion, expressing the interests of the old 
independent producers, which still heartily opposes monopoly. 
We have already noticed, in Chapter VII, the existence of these 
two views and analysed this latter view that of the small pro- 
ducers in some detail. We called the former, or pro-monopoly 
view, that of the national planners. We postponed its considera- 
tion until we had done with the whole question of the possibility 
of the restoration of a greater measure of freedom for the 
market. 

The national planners, far from wishing to restore greater 
freedom to the market, propose to further its curtailment. They 
have been struck, it seems, with the advantages of a planned 
system, independent of the motives of the market. They pro- 
pose, they tell us, to establish a system of " organized capi- 
talism." Quite a school of these " national planners " has grown 
up in Great Britain. 

At the present moment (1932), for example, a group of politi- 
cians, business men and administrators, including highly placed 
civil servants, is engaged in working out " a national plan for 
Great Britain," under the auspices of the weekly journal, The 
Week-End Review. And as Sir Josiah Stamp, chairman of the 
largest railway company in Great Britain, and Sir Basil Blackett, 
chairman of Imperial Cables Ltd. (both of them, also, directors 
of the Bank of England), are engaged in the work of this group, 
it is worthy of some attention. The reader will probably get a 
good sense of the views and objectives of this school of thought 
by some quotations from a recent speech by Sir Basil Blackett, 
one of its keenest members. Incidentally, the very existence of 
Sir Basil Blackett, who is both a big banker and a trust director, 
refutes the idea entertained by the " monetary reformers " that 
there is a conflict of interest between the bankers and the indus- 
trialists. On the contrary, the capital of the big bankers and the 
big industrialists is perfectly fused. The real conflict is between 
these big monopolist groups, on the one hand, and the remaining 
independent producers, on the other. It is noticeable how many 
of the monetary reformers are themselves, like the father of all 
of them, Mr. Arthur Kitson, ex-independent producers who have 
been squeezed out by the monopolists. 



288 THE COMING STRUGGLE FOR POWER 

Lecturing on January llth, 1982, on " The World Economic 
Crisis and the Way of Escape, 1 * Sir Basil Blackett devoted the 
first half of his speech to destroying, quite effectively, the case 
of the market restorers. Thus, he began by a defence of tariffs. 
According to The Times report of his speech, he said that : 

" Fatal to human progress as were the high tariff walls of 
to-day, it had long been obvious that the philosophy of 
laisser-faire had no answer to the reasoned demand for wider 
opportunities and a balanced economic life for large new 
communities overseas and for highly self-conscious national 
units in old Europe." 

So much for any hope of a reconstruction of the world market. 

" The spread of the technique of trade union organization 
and side by side with it the increase of humanitarian and social 
conscience regarding problems of housing, health, sanitation 
and working conditions generally, had rendered impossible 
or inadmissible many of those brutal economic adjustments 
which our grandfathers were able to regard as due to the 
intervention of a wise Providence, which used enlightened self- 
interest and unregulated human competitiveness as its material 
means to perform wonders in the cause of moral and material 
progress." 

So much for any possibility of the restoration of the free 
market in labour. 

Now, however, Sir Basil Blackett passes on to his own alterna- 
tive solution. He tells us that a whole new " philosophy " is 
needed. 

44 In the second sphere, then, the first necessity for the 
building up of the twentieth century was a new philosophy 
to take the place of the doctrine of laisser-faire. If tariffs 
at long last won the day against free trade in this country 
it was not because the nation had been converted to protec- 
tionism, but because tariffs might well be a useful instrument 
in a consciously controlled reconstruction of our economic 
life and because we had realized that the whole body of 



IMPERIALISM 289 

laisser-faire doctrine, the undiluted, individualistic philosophy 
of Bentham and his school, had broken down, was dead, and 
ought to be buried. . . . 

" A year ago planning was a new and startling idea in this 
country. To-day, it had become a clicht, and is correspondingly 
devoid of content to most of us, but he thought it was still true 
to say that rooted as we were in British traditions of personal 
and political freedom the average man and woman among us 
instinctively distrusted the idea of conscious planning, and we 
trembled for our cherished privileges and liberty when it was 
suggested that we had something to learn from Italy and 
Russia. The immediate task to which we should bend all our 
energies was to prove to ourselves and to the world that 
planning was consistent with freedom and freedom with 
planning. . . . 

" First and foremost in the planning of national reconstruc- 
tion came the necessity for a comprehensive insight into and 
a firm grasp of the inter-relationships between the various 
aspects of our political and economic and social life. The 
Cabinet Room in 10 Downing Street ought to have promin- 
ently emblazoned on its walls the Hegelian motto 4 The 
Altogetherness of Everything.' " 

Now we can find, if we look closely enough, the programme of 
the dominant British capitalists, lying concealed in this little 
exordium on the theme of " from Bentham to Hegel." We might 
expect it to be followed, however, by some indication of the par- 
ticular measures of " planning " which, the speaker considers, 
should be introduced. But here the speaker becomes increasingly 
vague. He turns aside from " the planned twentieth century " to 
give us a few remarks upon the desirability of stable money. It 
is clear that he will give us no blue print of an " organized 
capitalism." In this, Sir Basil Blackett shows his prudence. For 
the only reality of the whole programme would turn out to be, 
if it were expanded in concrete detail, the further squeezing out 
of the smaller independent capitalists. It is when its advocates 
attempt to bring down their descriptions of " organized capital- 
ism " from the abstract and general to the concrete and specific, 
that its contradictory nature becomes apparent. We may give as 



240 THE COMING STRUGGLE FOR POWER 

an example of an attempt to carry the conception somewhat 
further some proposals contained in a memorandum, entitled 
The State and Industry in 1932, which was submitted to his 
parliamentary colleagues by Captain Harold Macmillan in that 
year. Captain Macmillan is a conservative member of Parliament 
and is evidently a keen " national planner." He summarizes his 
proposals as follows : 

" A. Representative National Council^ for each industry 
and /or group of industries whose function would be to en- 
courage and assist the efficient co-ordination of purchasing, 
production, marketing, and research, on lines which would 
enable the industry concerned to evolve towards the highest 
possible unity of policy and the necessary degree of centraliza- 
tion of control. 

" B. The Councils to be given status by Government recog- 
nition of them as the authority with which it would deal on 
all matters affecting the interests which they represented. 

" C. Provision to be made for the association of Labour 
with the discussions of these Councils in all matters affecting 
the welfare of the workers, with a view to avoiding strikes or 
lockouts. 

" D. In the ten groups listed by the Board of Trade Journal 
for purposes of the Index of Production in manufacturing in- 
dustries, it would be easy to transform existing national 
associations into the proposed industrial councils. By extend- 
ing the scheme to the 24 groups listed by the Ministry of 
Labour Gazette the whole field of industry, commerce, and 
finance would be covered. 

" E. A sub-parliament of industry elected from these 
Councils each sending two or three representatives. These 
representatives would be available for consultation by the 
Import Duties Advisory Committee in its efforts to reconcile 
the interests of producing and consuming industries where 
protective measures were under discussion." 

These proposals contain, the reader will observe, all those 
elements which we have mentioned as essentially characteristic 
of the drive for monopoly. " The necessary degree of centralization 



IMPERIALISM 241 

of control " is to be achieved ; in other words, each industry 
is to be consolidated by the great banks and trusts ; the in- 
dependent producers are to be squeezed out ; trade union 
officials, whose role in the whole tendency we shall consider 
below, are to be " associated " with the councils controlling these 
increasingly monopolistic industries ; and, finally, the apparatus 
of the State is to meet and fuse with the apparatus of con- 
solidated industry at the designated point, at the point of the 
imposition of tariffs by which external competition is to be pro- 
gressively eliminated. 

Such measures will excite the strongest opposition in old- 
fashioned capitalist circles. For, however orderly and admirable 
they may sound to persons whose interests they do not affect, 
the smaller independent producers know from personal and 
painful experience that they mean death to them. They know 
too that the absorption of the smaller firms by the big mono- 
polists is in reality the whole purpose of such schemes : that the 
talk of order and planning is little more than an elegant intel- 
lectual disguise. 

The apparent intellectual confusion of many of the national 
planners is, we can now appreciate, well calculated. They do not 
want the real nature of national planning to be realized, either 
by others, or even to some extent, by themselves. If only national 
planning is left as a more or less academic question of the re- 
arrangement of the structure of industry and finance, and no 
awkward questions of method, conditions or consequences are 
raised, national planning can form a useful basis on which men 
of every type, men belonging to every political party, can, and 
do, join. There seems nothing in the idea of social order, plan- 
ning, pre-arrangement, which cannot be accepted by con- 
servatives, liberals and socialists alike. Indeed, the very term 
" organized capitalism " was invented by a man who refers to 
himself as a socialist Herr Hilferding. And this is natural, for 
what could be more comforting to men who have ceased to 
desire a socialist society, than to dream that capitalism will soon 
settle down, solve its difficulties, cease its struggles, and afford 
us all the stability of socialism without the necessity of fighting 
for it ? 

OP 



242 THE COMING STRUGGLE FOR POWER 

We now turn to the other aspect of imperialism, to the ques- 
tion of the growth of monopoly in the possession and exploita- 
tion of colonial territories. 

The national planners have thrown a mantle of intellectual 
respectability over the appetites of the British trusts. (Liebnecht 
called the Reichstag " the fig leaf of autocracy." We might 
call the national planners the fig leaf of monopoly.) In the same 
way, another theory has been elaborated to cover, albeit with 
considerably less intellectual pretensions, the turn towards the 
intensified exploitation of colonial peoples, which the British 
imperialists have executed. This theory, or policy, is called, 
quaintly enough, " Empire Free Trade." It is the policy of the 
Right wing of the Conservative party, which is of great power, 
and which is waging a desperate struggle, which may yet succeed, 
to capture the whole party machine. " Empire Free Trade " is 
the name given by the British capitalists to the most clear and 
explicit policy for maintaining themselves by increased overseas 
exploitation which they have yet formulated. (Indeed the objec- 
tion to it of such wise and cautious statesmen as Mr. Baldwin 
is just precisely that it is much too clear and explicit. For men 
who are in the real tradition of British statecraft know without 
even having to take the trouble to remember the reason, that 
everything which is over-precise and explicit, is also naive, 
amateurish and undesirable. 1 ) The object of Empire Free Trade 
is a simple one : it is to reserve the vast natural resources, and 
the vast markets, of the British Empire for the exclusive ex- 
ploitation of Empire entrepreneurs. The difficulties which such 
a policy must face are, however, enormous. As these lines are 
being written, the first major effort to make some sort of a begin- 
ning at an application of the policy are being made at the 
Ottawa Conference (August 1982). And already the " difficul- 
ties " the fact, that is, that the interests of the British 
capitalists and the Dominion capitalists are flatly contradictory 
are found to be daunting. (So daunting, indeed, that a certain 
ex-Liberal statesman is reported as saying that " if the British 

1 The transatlantic directness of Lord Beaverbrook will never be able to under- 
stand this. Lord Beaverbrook is perhaps destined to remain the Daisy Miller of 
British imperialism. The comparison may seem far-fetched but there really is a 
resemblance between Henry James's heroine, bewildered by the subtleties of the 
old world, and our vigorous but perpetually thwarted newspaper millionaire. 



IMPERIALISM 248 

Empire can stand Ottawa it can stand anything/ 9 ) It is proving 
almost impossible to secure agreement between the British and 
the Dominion entrepreneurs as to a division of the spoils. For 
the Dominion entrepreneurs have already erected high tariff 
walls not only against the rest of the world but against Great 
Britain herself. Hence, some of the problems of free trade in the 
real, as opposed to the Beaverbrookian, sense of the word are 
actually involved in making the Empire a great preserved area, 
protected against the rest of the world by tariffs. In order even 
to approach toward Empire Free Trade, existing tariffs would 
actually have to be taken down as well as built up. And that is 
always, as we have seen, a very difficult business. This difficulty 
does not arise, it will be said, in the case of non-self-governing, 
or coloured, parts of the Empire. Prohibitive tariffs, Lord 
Beaverbrook used to teD us, should simply be imposed by the fiat 
of the Colonial Office on foreign imports into these colonies while 
British goods were to be let in free, and the trade of these nations 
compelled to come to this country. Since he first proposed this 
plan, someone seems to have informed Lord Beaverbrook that 
the docility of coloured peoples is not what it was. The moment 
is not propitious, say the more cautious British statesmen, for 
a wholesale intensification of the exploitation of the Indian and 
Burman peasants. For these peasants, and those in several 
other parts of the Empire too, have already been driven to 
simmering revolt by their increasing misery and starvation. 1 
To make their few necessaries, their yard or so of cotton cloth, 
or their cooking utensils, dearer by a tariff might well prove the 
last straw. 

And yet an intensification of the exploitation of the workers 
and peasants of the Empire is the whole reality of the policy of 

1 Starvation is not in the least an exaggerated term. For example, Mr. Hesketh 
Bell wrote to the London Times on August 12th, 1982, as follows : 

" SIR, The following somewhat startling figures are taken from the statistics 
published in the Official Gazette of the colony of Mauritius : 

Births Deaths 

1980 12,793 14,841 

1931 11,890 15,467 

" These figures show that, during the last two years, in a British colony with a 
population of about 400,000 souls, the deaths exceeded the births by more than 
5,000 ! A perusal of the annual reports of the Medical and Health Department 
shows that this deplorable situation has not been due to any definite epidemic, 
but that it is chiefly the result of poverty and malnutrition among the labouring 
classes of the colony." 



244 THE COMING STRUGGLE FOR POWER 

Empire Free Trade. In the case of the self-governing Dominions, 
it can only be achieved as the result of a bargain struck with the 
Dominion capitalists. And this, as we have seen, is very difficult. 
The Canadian, Australian, South African and New Zealand 
capitalists feel, probably quite justifiably, that they are com- 
petent to do their own exploitation for themselves, without 
assistance. On the other hand, intensified exploitation can only 
be imposed upon the already half-starved peoples of the non- 
self-governing Empire at the risk of formidable revolts. Hence, 
the elaborate cover of words, the amazing rigmarole of Empire 
Free Trade, the unmatched claptrap of the Empire Crusade, 
were considered necessary in order to hide a purpose fraught 
with such grave hazards. 

This is not to say that determined attempts to apply measures 
of Imperial Protection will not be made. For an increase in the 
exploitation of the peoples of Great Britain and of the Empire, by 
one means or another, is the only way out for British capitalism. 
Moreover, there is another and perhaps decisive reason why 
imperial consolidation must be attempted almost at any risk. 
For, even though Imperial Protection is, as opposed to direct 
wage-cutting at home for example, a round about way of increas- 
ing exploitation, it has, as well as its greater demogogic pos- 
sibilities, an important additional advantage. If the Dominions 
are given important concessions in the British market, the real 
quid pro quo for Britain is likely to be, not so much correspond- 
ing concessions in the Dominion markets, but confidential 
military and naval understandings an attempt to stay the 
disruption of the Empire, in view of the ever-growing menace 
of war. There will be a last attempt to mobilize the united force 
of the Empire for the preservation of its world power against 
the menace of America, on the one hand, and of the Soviet 
Union, on the other. 

We have seen that the policies of the theorists of imperialism 
are quite as much a cover for, as an expression of, the true 
purposes of the dominant capitalist groups. These purposes are 
the progressive destruction of the independent producers and 
the intensified exploitation of the workers at home and of the 
peasants abroad. For those who are ultimately responsible for 



IMPERIALISM 245 

the propaganda of both national planning and Empire Free 
Trade are quite aware of the unreality of the dream of a great 
*' organized " monopolistic empire, to which these policies 
and phrases seem to point. They know perfectly that the com- 
petitive struggle of capitalism is to-day ten times as ruthless 
and violent as it has ever been before : that talk of " organiz- 
ing " or " planning " such a struggle is, and always must be, 
nothing but talk. 

But this is not to say that the whole character of the com- 
petitive struggle of capitalism is not changing. On the contrary, 
it is changing radically. For now that it is carried on, not between 
petty producers, but between mighty antagonists each of whom 
can enlist the power of whole states, these struggles are becom- 
ing nothing less than the grappling of great empires for the 
partition of the world. In the course of this vast, and final, 
expression of the competitive principle, the whole character of 
states and empires is being remodelled. Moreover, when capital- 
ism has taken on its last and most monstrous form, when com- 
mercial competition has evolved into inter-imperial war, at this 
very moment the conflict between the two classes in society, 
the workers and the capitalists, is reaching its final stage. Thus 
when capitalism is torn by the most violent and unappeasable 
rivalries, it is faced with its ultimate opponent. Menaced from 
within and from without, it must become incomparably more 
violent. The democratic forms, Liberal ideas, and subtle 
methods of the rule of the capitalist class have to be scrapped. 
Direct, open terror against the workers, violent aggression 
against its rivals, can alone enable a modern empire to maintain 
itself. A name for such a policy has been found : it is fascism. 



CHAPTER XIII 
The Goal of Monopoly 

IT may be that the reader, while finding the last Chapter a 
sufficiently lifelike picture of what is actually happening in the 
world to-day, will consider that the inevitability of these events 
has not been established. He may admit that the growing con- 
centration of production, the squeezing out of small firms by 
big, the formation of monopolistic organizations, is only pro- 
ducing a more violent phase of the internecine struggles of 
capitalism producers. But is it inevitable that this should always 
be so? 

" You have poured scorn," we may be told, " on the concep- 
tion of * organized capitalism.' But may not the eventual goal 
of this very struggle of the big producers towards monopoly, 
which you stress so much, be the creation of one single and 
complete monopoly ? May not competition be thus entirely 
eliminated and the market totally abolished ? Even though 
the process may be carried on exclusively by the violent 
methods you indicate, by the expropriation of the small in- 
dependent producers by the trusts, may not the end be one 
single all-embracing trust, undertaking itself the whole of 
production ? " 

This question is really analogous to the question of ultra 
imperialism which we discussed in Chapter IV. And in this case 
also it is perfectly easy to see that as a question of formal 
logic the end of a process of monopolization is complete 
monopoly. But it is equally easy to see that such formal logic 
has only the slightest reference to anything which is happening 
or can happen in the real world. It is quite true, we may con- 
cede, that if the process of monopolization were going on in a 
sort of social vacuum, its ultimate, logical, end would be unified 
monopoly. But this ultimate monopoly would not be capitalism* 
A non-competitive, " organized capitalism " is, indeed, a con- 
tradiction in terms. We saw in our original analysis that the 
mechanism of the market is at the very heart of the system. 
For the whole possibility of the existence of capitalism is de- 
pendent upon the possibility of there being some objective 



THE GOAL OF MONOPOLY 247 

process for the determination of prices. And prices can only 
be determined by competition on the market. If there were 
no objective factor to settle prices, capitalism would lose 
its only " governor," and the whole machine would run 
amuck. 

Consider, for example, the effect of even creating complete 
monopolies in each important branch of production. The result 
of such a process would be to transform, not to abolish, the 
principle of competition. For it is clear that if, to take three 
examples, the coal industry, the oil industry, and the hydro- 
electric industry, were each marte into complete monopolies, 
the fiercest competition must immediately break out between 
these industries. For each provides an alternative source of 
power. The coal monopoly and the oil monopoly must fight each 
other for the market provided by the steel monopoly. But this 
would be only the beginning of the war of the industries which 
must ensue. Not only must the industrial monopolies producing 
interchangeable products struggle with each other, an equally 
fierce struggle must break out between monopolies producing 
quite different types of commodities. For the raw material of 
one monopoly would be the finished product of another. Thus, 
the engineering monopoly must struggle with the steel monopoly 
over the price of steel. For the lower the price of steel, the bigger 
the share in the wealth of society of the owners of the engineer- 
ing monopoly, and the smaller the share of the owners of the 
steel monopoly and vice versa. This illustrates the fact, which 
we hinted at in Chapter III, that the super profits of monopoly 
are only obtainable so long as considerable parts of the produc- 
tive system are still subject to the laws of competition. If, for 
example, the steel industry has become a monopoly and both 
the mining industry and the engineering industry are still con- 
ducted competitively, then clearly the steel monopoly is " on 
velvet." It can buy its coal cheap from the unorganized mine 
owners, and sell its steel dear to the unorganized engineering 
firms. It can suck up to itself both the profits which are being 
made by the mine owners out of the exploitation of the miners 
and the profits being made out of the engineers by the engineer- 
ing firms. 

But if both the mining industry and the engineering industry 



848 THE COMING STRUGGLE FOR POWER 

I 
have become monopolies also, he position is quite different. 

How in this event are the prices^ of coal and of steel to be fixed ? 
Only by a direct struggle befrwen the mining, the steel and the 
engineering monopolies. For tie objective factor in the deter- 
mination of prices will have been destroyed by the monopoliza- 
tion of the three branches of production. True, a competitive 
struggle is still available to fix prices the struggle between the 
industries concerned as wholes. What would be the methods of 
such a struggle ? They could not be the comparatively peaceful 
methods of price cutting : th*jy could only be the methods of 
direct struggle by menace, by intrigue, and, in the last resort, by 
armed force. For there would remain no objective element in the 
process. The conflicting desires for profit of the respective trust 
owners would come into direct collision. And wherever the 
principle of monopoly has actually been pushed almost to this 
point, the trusts have begun to hire private armies of thugs, 
with which to enforce their will. (The classical example is the 
use of armed force by Mr. Rockefeller in building up and 
maintaining the monopoly of the Standard Oil Company over 
the trans-continental pipe lines.) Such would be the conse- 
quences of the destruction of the competitive method of de- 
termining prices within each branch of production, such the 
consequences of the first approximation towards " organized 
capitalism." 

" But," we may be told, " you must not stop there. Not only 
must each industry be monopolized, but there must be one 
single national monopoly of industry. One group of capitalists 
must absorb all the others : must become the owners of the 
whole of the means of production. Then, at any rate, organized 
capitalism would come into existence." 

This conception is, perhaps, too fantastic to merit discussion. 
Undoubtedly, however, certain people are to-day playing with 
such ideas. Hence, it may be worth while to examine the con- 
sequences which must ensue from such an ultimate monopoly. 
What we are asked to envisage is a perfectly monopolized, non- 
competitive, planned economy, combined with the present class 
hierarchy. The inherent contradictions of such a conception may 
not be at once apparent. And yet it ignores at least two of the 
basic features of capitalism, features which it would be impossible 



THE GOAL OF MONOPOLY 249 

to change while maintaining the present ruling class in power. 
The first of these features is, of course, the private owner- 
ship of the means of production. A planned, monopolistic, 
"organized" economy is quite impossible so long as the means 
of production are owned by a class of private individuals. In- 
deed, as we have seen, the appropriation of the entire means of 
production by a single capitalist group is a prerequisite to the 
whole conception. The whole of the rest of the capitalist class 
would have to become the passive pensioners of this one group. 
This consideration alone removes the idea of an " organized 
capitalism " to a distance very far from reality. 

Let us assume, however, that somehow or other this task had 
been accomplished. There must immediately arise the question 
of how this perfect centralization of the means of production 
is to be maintained. We have to envisage, let us remember, a 
society in which a single capitalist group possesses the effective 
ownership and control of the entire apparatus of production, 
and yet, at the same time, the present numerically considerable 
capitalist class still exists, and still enjoys its present standards 
of income. They must presumably be paid this income by way 
of dividends, probably of a fixed character, on holdings of bonds 
in the giant unified concern Great Britain Ltd. which is un- 
dertaking all production. But what are they to do with their 
dividends ? Spend part of them and save the rest, we shall no 
doubt be told. And certainly the instinct to accumulate is the 
deepest instinct in the whole of capitalist psychology. But it is 
surely clear that in our monopolist nightmare, saving by indi- 
vidual capitalists must be sternly forbidden. For saving, as we 
have defined it in Chapter VI, means buying a part of the in- 
struments of production. And the instruments of production 
would be, in our imaginary society, the exclusive monopoly of 
a single capitalist group. Hence the outside capitalists, now 
become pensioners, could not possibly be allowed to buy them 
back. Some method of ensuring that the entire incomes of the 
capitalist class (now become pensioners) should be spent, would 
have to be devised. The magnitude of this task would be very 
great. It would be necessary for the capitalist pensioners to turn 
whole vast areas of the world into places comparable to the 
French Riviera, to-day : whole coast-lines would have to be 



250 THE COMING STRUGGLE FOR POWER 

remodelled in order to find a use for incomes which must at all 
costs be spent. But let us suppose that a new race of capitalists, 
bereft of the instinct to accumulate, and highly skilled in the 
arts of super-spending, could be evolved. Even so, we are only 
at the beginning of the difficulties of our " perfect monopoly." 
What of the armies of skilled technicians and administrators, 
who would be necessary to such a regime the present salariat ? 
Are they to be forced to spend their entire incomes or, are they 
to be allowed to acquire part of the instruments of production 
and so gradually to undermine the monopoly? Moreover, are 
they, and the whole of the lower middle class, to be prevented 
from engaging in trade, from starting " little businesses of their 
own " ; and, if so, how ? How, for example, are the scientific 
technicians to be prohibited from developing new inventions 
for their own profit ? Certainly nothing short of a law prohibiting 
all technical changes will suffice for this purpose. And yet, if 
private individuals are allowed to start businesses, and if these 
businesses succeed, they will re-introduce the whole process of 
private accumulation, and this, in turn, must undermine the 
monopoly of the means of production, and so re-introduce com- 
petition, the market, the anarchy of production, and all the 
other features of present-day capitalism. 

These objections to the possibility of a perfect monopoly of 
all the means of production could be studied in great detail. 
And there is no doubt that the conclusion which we should come 
to would be that what a capitalist group which had obtained 
the monopoly of all the means of production would have to do, 
if it wished to retain power, would be to abolish money. Only in 
a moneyless economy, in which goods and services were distri- 
buted by a rationing system, could the power by such a 
monopoly be maintained. For only so could the possibility of 
private accumulation be removed. But can any of us possibly 
conceive of the existence of a moneyless capitalism ? To such 
contradictions are we led by the dreams of the national planners. 
In spite of this, it may be useful to examine what the character 
of such a society would be. In doing so, however, it must be 
clearly understood that such a future for capitalism is quite 
impossible. We discuss it simply and solely because there may be 
readers of this book who, while they will not admit the inherent 



THE GOAL OF MONOPOLY 251 

impossibility of such a future, may yet be made to realize the 
full horror of the goal at which they are aiming. It is well to 
draw the attention of those in many cases well-intentioned per- 
sons, who talk of " national planning," " organized capitalism " 
and the like, to the consequence which would inevitably follow 
if their aim could be realized. We shall, it is hoped, be able to 
demonstrate irrefutably that the realization of their dream 
would, if it were possible, involve the re-enslavement of nine- 
tenths of humanity and the ruin of human civilization. 

We have not yet spoken about the position of the workers 
in our imaginary nightmare of monopoly. There is no doubt, 
however, that the re-introduction of serfdom for the workers 
must be one of its first consequences. It is clear that if we can 
conceive at all of one single monopolist, or group of monopolists, 
having secured the possession of the entire means of production 
of the community, that monopolist would have become, ipso 
facto, the State. He and his fellow directors would be omnipotent 
dictators. Now, as we have said, certain capitalist theorists have 
juggled with such ideas. We have already noticed Mr. Aldous 
Huxley's self-revealing sketch, placed far into the future, in 
his book Brave New World. A far less fantastic prediction of a 
similar future was made some years ago by the well-known 
Roman Catholic apologist, Mr. Hilaire Belloc. In his curious 
little book The Servile State, Mr. Belloc shows that he under- 
stands quite well the inherent instability of capitalism. He 
tells us that : 

" This book is written to maintain and prove the following 
truth : 

" That our free modern society in which the means of pro- 
duction are owned by a few being necessarily in unstable 
equilibrium, it is tending to reach a condition of stable equi- 
librium BY THE ESTABLISHMENT OF COMPULSORY LABOUR 
LEGALLY ENFORCEABLE UPON THOSE WHO DO NOT OWN THE 
MEANS OF PRODUCTION FOR THE ADVANTAGE OF THOSE WHO DO. 

With this principle of compulsion applied against the non- 
owners there must -also come a difference ift-their status ; and 
in the eyes of society and of its positive law men will be di- 
vided into two sets : the first economically free and politically 



252 THE COltlNG STRUGGLE FOR POWER 

free, possessed of the means of production, and securely con- 
firmed in that possession ; the second economically unfree and 
politically unfree, but at first secured by their very lack of 
freedom in certain necessaries of life and in a minimum of 
well-being beneath which they shall not fall. 

" Society having reached such a condition would be released 
from its present internal strains and would have taken on a 
form which would be stable : that is, capable of being in- 
definitely prolonged without change. In it would be resolved 
the various factors of instability which increasingly disturb 
that form of society called Capitalist, and men would be satis* 
fied to accept, and to continue in, such a settlement. 

" To such a stable society I shall give, for reasons which 
will be described in the next section, the title of THE SERVILE 



It may not, at first sight, be apparent why the abolition of 
competition, and the mechanism of the market, should necessi- 
tate the legal imposition of compulsory labour. And yet, of 
course, the reason is clear. A non-competitive society may be 
defined as a society, in which the crucial questions of (i.) what 
work is to be done, (ii.) who is to do it, and (iii.) who is to receive 
its fruits, are not left to the motives of the market, but are con- 
sciously predetermined by some person or persons. It is clear 
that in such a society an obligation to work (since men are not 
universally or equally industrious by nature) must be placed on 
the members of society, if, and this is the critical point, all are 
also to be guaranteed a share in the product of this social work. 
If, however, as we shall show in Chapter XIX, all men in such 
a society share approximately equally in the product of social 
labour, there is no element of slavery or serfdom in the uni- 
versal obligation to work ; for in that case it is an obligation self- 
imposed upon society. (Mr. Belloc, than whom no man could be 
more anti-communist, concurs, as we also show below, in this 
view.) If, however, the share of the social product received by 
individuals is grossly and systematically unequal, if, in par- 
ticular, some persons receive their incomes' not in virtue of work 
done but by virtue of the ownership of the means of production ; 
and if the legal obligation to work does not, either in practice, or 



THE GOAL OF MONOPOLY 258 

in theory, apply to them, then we have a system of serfdom for 
the workers. 

Capitalism avoids an open and legal status of servility for the 
workers because, and only because, it neither legally compels the 
members of the community to work, nor guarantees them any 
share of the social product. It relies on the motives of the 
market both to induce men to work and to ensure that they shall 
provide each other with sustenance. Now the argument of the 
first half of this book has been that to-day the motives of the 
market are incapable of performing either of these functions. On 
the contrary, they actually prevent millions of men from work- 
ing, and ensure that other millions shall not have sustenance. 
That is why we speak of the breakdown of the capitalist system. 
But if the capitalists ceased to rely upon the motives of the 
market in order to induce the workers to work for them, they 
would have to rely upon legal compulsion. And if they im- 
posed compulsory labour, they would re-introduce, unless they 
both imposed it universally and shared its fruits approximately 
equally, open serfdom for the workers. We reach the unavoidable 
conclusion that the serfdom of the workers must be the result of 
a system of universal monopoly. 

As we have already noticed, however, such a perfect mono- 
poly must be, in fact, if not in form, the State itself. The final 
trust, after absorbing all its rivals, must absorb the State as well. 
But just as we discovered that the monopolization of each par- 
ticular industry served only to reintroduce competition between 
industries, so also the monopolization of all industries, and their 
fusion with the State, would only re-introduce competition at yet 
another point. And this new point would be the point of compe- 
tition between the different State trusts, (or " Trust States," it 
matters not at all which they are called). And the form taken by 
competitive struggle between states is war. 

We have already seen that the degree of monopoly which has 
already been achieved within the principal capitalist states has 
immensely exacerbated the relationship between them. Capital- 
ism, after the formation of these monopolies, has become im- 
perialism. It has taken on a far more violent and bellicose form. 
What, then, should we say of the consequences of the establish- 
ment of our hypothetical, perfect monopoly, in a number of the 



254 THE COMING STRUGGLE FOR POWER 

great capitalist states? For clearly we cannot suppose that a 
perfect monopoly of the means of production could be formed on 
any other basis than a national or imperial one. Apart alto- 
gether from the fact that monopoly capitalism is imperialism, we 
find that in the field of ideas also, the connection between the 
propaganda of extreme nationalism and the attempt to subject 
the workers to the domination of the great trusts, is as necessary 
in theory as it is obvious in practice. For if the attention of the 
workers is to be distracted from the blatant inequalities of 
capitalism, so that they will not rebel too vigorously even against 
the attempt to impose the open, frank and rigid inequalities 
which, as we have seen, would have to be the first consequence of 
a perfect monopoly, they would have to be given some kind of 
ideal consolation. What is, in fact, done, even at the present 
stage of monopoly, is to excite ferociously nationalistic and 
patriotic feelings by every possible device. The propagandists of 
the capitalist class feel that it is vital that the workers should be 
made to forget as much as possible that they are workers and to 
remember every minute of the day that they are Britishers, 
Frenchmen, Germans, Americans, or Japanese. Their natural 
haired of an employer who is cutting their wages must be 
drowned in an artificially evoked and stimulated hatred of all 
foreigners : their natural sense of fraternity with their fellow 
workers, suffering under the same wage cuts, must be drowned 
in a synthetic frenzy of unity with every class and kind of their 
countrymen. Thus, it is no accident, but an absolutely neces- 
sary, and logically correct, policy, which dictates the intense 
nationalism and bellicosity of all the propaganda of the capitalist 
class. 1 How much more violently nationalistic and bellicose 
therefore would have to be a State trust, or Trust State, of the 
kind we have postulated ? 

What would be the consequences of six or seven or more of 
them existing in this narrow planet at the same moment ? Yet 

1 Lord Beaverbrook, for example, recently issued the slogan " Thou Shalt not 
Steal/* He told the readers of his newspaper that the livelihoods of British workers 
and farmers were being stolen from them by wicked foreigners who sold goods on 
the British market. The remedy lay to hand. Exclude the foreigners from the 
British market and take from him all those markets over which Britain has 
political control. The same idea has, curiously enough, occurred to the French, 
German, Italian, Dutch, American, Japanese, Polish, Spanish, Argentine and 
Czecko-Slovakian Lord Beaverbrooks. 



THE GOAL OP MONOPOLY 2S5 

it is, as we have seen, inconceivable that one single international 
system of monopoly could be created. For each attempt to 
approach monopoly conditions necessarily involves the most 
extreme nationalism and imperialism on the part of the par- 
ticular capitalist group which is making the attempt. Thus, the 
only prospect held out by the ideal of " organized capitalism," 
even if all its inherent contradictions are discounted, is a world 
system of internally monopolistic, ferociously bellicose, slave- 
empires. Needless to say, a whole series of wars, the smallest 
of which would dwarf anything which the world has hitherto 
known, as the recent war dwarfed a Roman border skirmish 
against the Picts and Scots, would inevitably result. For Mr. 
Hawtrey's " continuous conflict of national force " must time 
after time break out in open war, as the only conceivable way of 
deciding the issue of flatly conflicting imperial wills. There is, it is 
true, one way in which this series of wars between rival slave- 
empires might end. Sooner or later, some one empire might 
emerge the surviving victor in this immeasurable world tourna- 
ment. And then at last the peace of a world monopoly might 
reign. Over what kind of world, however, would it reign ? 

We have now quite frankly entered the realm of the imagina- 
tion. But let us follow our nightmare to the bitter end. Now it is 
usual to talk loosely of another war " destroying civilization." 
This is probably an exaggeration. The destructive power of the 
methods of modern war are, of course, terrific : the losses and 
suffering of the next war would or, rather one must write, will 
be incomparably greater than those of the last war. It may 
well be that civilization will be extinguished over whole areas of 
the earth's surface. Some defeated nations may well be exter- 
minated en bloc in the concluding phases of the contest. It is 
quite true that this is the future prospect which capitalist im- 
perialism holds out to us. This will certainly be our fate if we 
leave the capitalists in power. All the same, the next war will 
probably not destroy civilization. It is often forgotten that 
science is almost equally applicable to the tasks of reconstruction 
as to those of destruction. The world to-day has almost as great 
a power of recuperating as of destroying itself. Hence a single 
war, at any rate, would be hardly likely to destroy civilization 
all over the world. 



256 THE COMING STRUGGLE FOR POWER 

We have envisaged, however, a whole series of wars, and 
these on the most gigantic scale, as the only conceivable way by 
which, even on our hypotheses, a world monopolistic slave- 
empire could be established. And it is certainly difficult to see 
how human civilization could stand such an epoch of wars. The 
level of the world's culture would at the very least deteriorate 
sharply. Each outbreak of war between the slave-empires would 
offer the workers the opportunity of emancipation. Every such 
war would be complicated, as were the wars of the Greek states, 
by revolts of the helots. And it is impossible to believe that some 
of these revolts would not succeed, and communistic communi- 
ties be established. Let us, however, suppose that this new and 
appalling kind of inter-imperial tournament was fought out to a 
finish and that some victor empire came to possess the whole 
earth as its fief. Over what sort of a world, we may ask again, 
would such an empire reign ? 

If all the revolts of the workers during the earlier wars had 
been so thoroughly crushed that during the later ones the 
governing class would have become secure, it would necessarily 
mean that the workers had been debased into barbarians in- 
capable of turning their masters' instruments of war against 
them. Hence, as it would be necessary to reduce the workers to 
barbarism in order that they should find that their perpetual 
servitude was natural and appropriate, civilization for the 
immense majority of mankind would in any case have perished. 

It is curious to speculate, however, on the culture of the 
governing class in such a community. For it would be naive to 
suppose that the characteristics of the culture of the heyday 
of capitalism could be retained under a system of universal 
monopoly. Such a society would be static. There could be no 
technical progress. For the most stringent (and, as we have seen, 
in practice, quite unworkable) laws against any advance in 
technics would be necessary, lest opportunities for private 
accumulation might be given. Hence, scientific knowledge would 
inevitably cease to grow, and would soon begin to decay. Great 
efforts would no doubt be made to maintain it at a level adequate 
to the existing technique of production, and such efforts might 
well be successful for a century or so. Sooner or later, however, 
the fact that science had become, not a living and developing 



THE GOAL OP MONOPOLY 267 

attitude of mind, but a body of dead rule of thumb formulae 
for obtaining certain results the fact that the reasons behind 
the rules of science were increasingly being forgotten would 
make it impossible even to maintain the existing level of scien- 
tific knowledge. And so in the end the technique of production 
must begin to decline. 

Again, as we have seen, it would be disastrous to the stability 
of the community that there should be any private savings or 
accumulations. The whole of the vast amount of wealth, beyond 
their own subsistence, created by the workers could and would 
have to be utilized for the pleasure of the governing class. 
The sheer horror of perpetual pleasure, however, would turn 
many of the governing class back to the consolations of religion. 
At first, no doubt, the incorrigible intellectuals would create a 
new stoicism. 1 

(And here begins to appear the parallel with the declining 
stage of the Roman Empire which is inevitable in any fantasy 
of this kind.) A far greater number, however, would no doubt 
turn to a religion rich in emotional content. And why not to 
a well-adapted version of Roman Catholicism itself? Roman 
Catholicism was the religion of agricultural monopoly. Why 
should not a new version of the same faith prove the dominant 
religion of an industrial monopoly ? Would it not be reasonable 
to suppose that in such a society, the Church would, as the 
centuries went by, assume greater and greater importance? 
And would it be reasonable to suppose that that importance 
would be confined to things spiritual : would it not inevitably 
extend to things temporal ? Would not a point be reached at 
which the Church would become of equal authority to the State ? 
And would not the problems of this diarchy be solved, as they 
were once before, by the union of Church and State ? May we 
not, then, envisage a new Constantine approaching down the 

1 Cf. the doctrine of " the great year " held by the Stoics of antiquity. This 
was a doctrine of the eternal return of all things, dated by the calculations of the 
astrologers. The Stoics believed that since the movements of the planets deter- 
mined all human affairs, it must follow that when a moment came at which all 
the planets had returned simultaneously to positions which they had occupied 
before, human affairs too would have completed their cycle and have returned 
to their starting point. This was the cycle of the planetary, or " great " year. 
Such a planetary cycle does exist and modern astronomers have calculated that 
its duration is of some 60 million solar years. 

Rp 



258 THE COMING STRUGGLE FOR POWER 

avenue of the future, as the Roman Emperor recedes from us 
into the past ? 

And, if this be the logical line of development, do we not 
know whither the assumption of temporal power by the Catholic 
Church would lead ? We have already postulated that scientific 
knowledge and the technique of production would be in decline. 
Has not the race been once before at that point in history when, 
in a period of economic decline, the Catholic Church assumes 
control over the destinies of man ? Is it not clear, then, that the 
new world empire would decline by the same road as the old one ? 
True the barbarians, who would in the end destroy it, would 
come this time from within rather than from without. For as 
the scientific knowledge of the governing class waned, and their 
religious preoccupation waxed, the workers, slaves for some 
centuries, would raise their heads again and the new World 
empire would dissolve as did the old, into a warring chaos. 
A new dark age of ecclesiasticism, in which the knowledge and 
skill, the culture and civilization of the world would temporarily 
disappear, must follow. Then the great monasteries would re- 
appear, and, since by one of the paradoxes of history, the Church 
is both the slayer of civilizations and the faithful preserver of 
their traditions, these monasteries would become the sole re- 
positories of learning. The Europe of the middle ages would be 
re-enacted, but this time upon a world scale. And the civilization 
of such a new middle age might bear the same relationship 
to our civilization as did the civilization of, say, A.D. 1000 to 
the civilization of the zenith of the Roman system. The eternal 
return of all things Nietzsche's " abysmal thought " would 
have come to pass. 

And yet even so, if a series of monopolistic slave-empires 
were to be achieved ; if the stable monopoly of a victor empire 
were to be set up after a series of wars which reduced the workers 
of the world to helotry ; if this victorious world empire were 
itself to decline over long centuries into, a new dark ages ; if 
the great monasteries, the ignorance, the premature death, 
disease, want, and superstition of the Europe of A.D. 1000 
were to come back ; if it was seen that mankind had indeed 
trodden a ghastly circle of predetermined cause and effect, yet 
still we should not have the right to despair. If we were to have 



THE GOAL OP MONOPOLY 859 

a new dark ages, we should have a new medievalism : if a new 
medievalism, then a new renaissance. There is no more reason 
to suppose that mankind would stay at the nadir of the circle 
than at the zenith. Nor need we believe that the figure of history 
is a circle : it is a spiral. The new medievalism would not be 
the old medievalism. Its priests would mutter misunderstood 
fragments of Marx and Darwin, not of Aristotle. And when the 
renaissance came, we, and not the Romans, should be antiquity. 
A new Shakespeare might spread the glory of his young fancy 
over Lenin instead of Caesar : a new Copernicus take up the 
work of Einstein and of Dirac, not of Ptolemy. For why should 
the achievements of our age be wholely and permanently lost 
when those of the Greeks and Romans were in part preserved ? 
And since the new renaissance would start one turn further up 
the spiral than we did, the new capitalism which must follow 
would achieve a higher culture than did ours. And then, without 
doubt, men would come to the critical turning point of history 
which we have reached, adequately equipped to take without 
doubt or hesitation the road to communism. 1 

But these are fantastic speculations. One hundred and sixty 
millions of men and women have already taken the road to 
communism. They have leapt out of the kingdom of necessity 
towards the kingdom of freedom : they have decided for them- 
selves that it was from this turn of the spiral of history that men 
achieved communism. Who can doubt but that their example 
will serve to save the race from the necessity of repeating the 
pilgrimage of its last 2,000 years ? 

We have only indulged in the foregoing piece of somewhat 
fanciful speculation in order to show those who cannot be 
convinced of the impossibility of complete monopoly, of " or- 
ganized capitalism," that, in any case, its consequence could 

1 Naturally the repetition at a new level of development of the historical cycle 
of the last 2,000 years is only an arbitrarily selected example of one of the cyclical 
movements of history. Thus, the achievement of communism to-day could also 
be thought of as the return to a previous state of society, but on a new level of 
development. For the race has passed through a communistic stage once before 
in its tribal youth. But in this case the radius of the spiral would be a wider one. 
On the other hand, if civilization collapsed altogether and culture dropped to a 
semi-human or pre-human point, that too may be thought of as signifying merely 
that life has had to go rather a long way round. 



260 THE COMING STRUGGLE FOR K>WER 

only be the re-enslavement of man and the ruin of his cultural 
heritage. 

The real business of these pages, however, is not with such 
nightmares : it is with the quite sufficiently grim realities of the 
existing situation. 



V. R. NARLV 



CHAPTEB XIV 
Fascism 

AT the end of our analysis of imperialism, we came to the con- 
clusion that new methods, both at home and abroad had become 
necessary for the capitalist class. Capitalism was so hard-pressed 
alike by the rivalries of the competing empires, and by the 
disaffection of the working class, that new and far more violent 
methods than any which the capitalists had hitherto employed 
would alone suffice to maintain the system. We arrived at this 
conclusion theoretically. But, if we look round the world, we 
see at once that it is fully justified by direct observation. 
Everywhere the capitalist states are actually adopting methods 
of unparalleled violence both against the workers and against 
each other. We noticed that a name for the most characteristic 
expression of these new methods of capitalism has been found. 
They are called fascism. 

Now fascism is a deceptive phenomenon and needs some 
analysis before its real nature becomes apparent. Not so long 
ago, it was thought of as a purely Italian movement, incapable 
of export. In the last few years, however, unmistakable fascist 
movements have appeared in several European countries ; 
notably in Germany. It has become clear that there is nothing 
peculiarly Italian about fascism : that it is a political phe- 
nomenon which appears wherever certain economic and social 
conditions prevail. Specifically fascist parties have appeared in 
countries such as Germany, Poland and Austria, which are in 
the grip of violent eqonomic crises, and where the workers 
acutely threaten the stability of the capitalist state. Moreover, 
methods and catchwords which resemble those of the specifically 
Fascist parties begin to appear almost everywhere. 

Let us, therefore, attempt a definition of fascism, wide enough 
to cover these phenomena. We may say that fascism is one of 
the methods which may be adopted by the capitalist class when 
the threat of the working class to the stability of monopoly 
capitalism becomes acute. We say "one of the methods'* 
because it is by no means certain the fascist method will be 
everywhere used by the capitalist class during periods of crisis 



262 THE COMING STRUGGLE FOR POWER 

in their conflict with the forces of the workers. For the fascist 
method essentially implies the attempt to create a popular 
mass movement for the protection of monopoly capitalism. Its 
adoption means that the directing capitalist groups consider 
that the regular State forces at their disposal are inadequate or 
unsuitable for repressing the workers. Thus, an attempt is made 
to create, by the employment of skilled demagogues, the ex- 
penditure of large sums of money, and the reckless dissemination 
of propaganda designed to play on every prejudice, a mass 
party composed of a petty bourgeois nucleus, combined with 
such backward workers and peasants as can be successfully 
deceived. This party is then used for the destruction by terror 
of working-class organizations of struggle, the workers' defence 
organizations, clubs, trade unions, newspapers and party 
" machines.'* 

Now this method of defending capitalism has its disadvantages 
as well as its advantages. For example, it is impossible that a 
party recruited by the methods enumerated above should prove 
a reliable instrument in the hands of the capitalists. It is always 
liable to get out of control. For it is almost always impossible 
to get the fascist party together without using some anti- 
capitalist slogans, in the early stages at any rate, of the necessary 
propaganda. And this type of propaganda may have so coloured 
the minds of the rank and file of the Fascist party as to make 
them difficult adequately to control. Again, the retention of 
power by the capitalist class by means of the success of a fascist 
party necessarily implies the scrapping of all democratic in- 
stitutions. It involves the revelation without any attempt at a 
democratic disguise, of capitalist dictatorship. And a wise 
capitalist class will certainly not dispense with the serviceable 
mask of democracy, which has stood it in good stead, until no 
other course is open to it. 

The creation of a Fascist party is, then, a desperate expedient 
only resorted to by a capitalist class in the face of the most 
urgent danger from the workers. And, even then, the capitalists 
may, in some states at least, adopt violently repressive methods 
by means of the use of the ordinary State apparatus, rather than 
attempt to create a mass party of their own. Indeed, we can all 
see that such methods of violent repression are being more and 



FASCISM 208 

more adopted by even the most sedate capitalist classes. It is 
only if the ordinary official capitalist parties adopt these methods 
too slowly, if the march of events towards crises is too rapid 
for their power of adaptation, that overtly Fascist, and 
nominally " revolutionary," mass parties are organized. For 
Fascism is a " revolutionary " actually counter-revolutionary, 
of course force in but a very limited sense of the word. It does 
not seek to substitute the rule of one class for that of another, 
which is the only genuinely revolutionary act : on the contrary, 
its whole purpose is to preserve the rule of the capitalist class* 
But in certain circumstances fascism may become in a sense 
revolutionary. It becomes revolutionary in the sense in which 
the French politician Clemenceau was revolutionary when he 
preached and practised that, even though the Germans were 
hammering at the gates of Paris, it was the duty of good French- 
men to oppose the weak French Government then in power 
d Voutrance. For he saw that the only way in which the French 
capitalist class could be saved was by the overthrow of their 
own Government. In the same way, the fascists became " revo- 
lutionary," not in order to destroy the rule of the capitalist 
class, but in order to destroy weak capitalist governments which 
supinely allow the strength of the workers to grow to un- 
manageable proportions. If, however, an existing capitalist 
government is neither weak nor supine, and is quite ready to 
fight the workers itself, there is no need for the organization 
of a special fascist mass movement. This does not mean that 
in this case violent methods will not be used. It means that the 
capitalist class in question has shown sufficient flexibility to 
transform its existing political parties, to fuse them, into an 
instrument for the withdrawal of democracy and the forcible 
suppression of working-class organizations, thus avoiding the 
necessity of creating a new specifically fascist party. The question 
arises whether, in this case, these new and violent methods 
should be called fascist. The name is often applied to them, 
but it should be borne in mind that they are only fascist by 
analogy. 

If a capitalist class can succeed in transforming and fusing 
its existing political parties into a " National Government," 
for instance the institutions of democracy will be gradually 



Mi THE COMING STRUGGLE FOR POWER 

and, if possible, imperceptibly withdrawn. The Press will be- 
come a better and better directed and drilled servant of the 
capitalist class. All other methods of disseminating information, 
notably the cinema and the wireless, will be more and more 
consciously monopolized. Power may be gradually withdrawn 
from a democratically elected Chamber (cf . Reform of the House 
of Lords in Britain) or alternatively the franchise may be 
gradually curtailed (cf. the proposals of the British Conser- 
vative party for withholding the franchise from persons in 
receipt of poor relief). At the same time, the habitual regime 
of police violence will be increased (cf. the present heavy sen- 
tences on working-class militants in Britain passed almost 
openly, not for any specific offence but because the accused 
were working-class militants, as notably in the case of Arthur 
Homer; the increasing use of terror in all American wage 
disputes ; the police regime in France, etc., etc.). This method 
applies the principle of " the inevitability of gradualness " to 
the introduction of an open capitalist dictatorship. And if the 
breakdown of the system and the revolt of the workers will 
await the convenience of the capitalists, then no doubt it is for 
them the preferable method. At any time, and in any capitalist 
state, however, things may begin to move too fast for this method 
to be successful. And in this event, it will be necessary to resort 
to the attempt to create a mass fascist party. 

We have characterized the Fascist parties as an attempt on 
the part of the directing capitalist groups to organize a mass 
party for their defence. But, as we saw, this task is a difficult 
and somewhat delicate one. For the rank and file of the fascist 
parties cannot possibly be allowed to realize that this is the 
only purpose for which they ar^ to be used. A continual stream 
of the wildest appeals to all sorts of contradictory prejudices 
must be kept up. The German fascists have developed this 
technique to the greatest extent. Every emotion, which the hearts 
of backward members of the ruined middle class of Germany 
may cherish, is played upon. The fact that these emotions are 
of a confusedly anti-capitalist character does not worry the 
paymasters of the German fascists. On the contrary, such anti- 
capitalist emotions are carefully catered for. The Fascist party 
is actually called a "National Socialist Party": "Loan 



FASCISM MS 

Capital," a convenient term which need not be too closely 
defined, is denounced : above all, anti-Semitism, which in Gar- 
many has long been called " the socialism of fools, 9 ' is fostered* 
(All the same the dissemination of this type of propaganda, 
which has proved very effective in Germany may turn out to 
have been a very rash act on the part of the German capitalists 
who have paid for it.) 

The Italian movement was, it is now conveniently forgotten, 
built up on propaganda of a no less extravagant, and of a no 
less anti-capitalist, sort. Now, however, that fascism has become 
the official and permanent method of rule of Italian capitalism, 
other and more presentable theories have to be invented for it. 
Signer Mussolini and his lieutenants now talk the language of 
the " national planners." We hear a great deal about the 
" Corporative State " : about " parasadial " organizations and 
what not. And, in fact, since Italian capitalism has now more or 
less completed its evolution into monopoly capitalism or im- 
perialism, these phrases do correspond, in a sense, to some 
economic reality. But it is an economic reality which has nothing 
specifically fascist about it. It is now nearly ten years since the 
fascist coup d'&at, and yet Italian capitalism has developed 
along just the same lines as capitalism in the so-called demo* 
cratic countries. The Corporative State has remained on paper. 
Some spectacular public works have been executed (but public 
works are after all a very old story even for such comparatively 
lalsser-faire countries as Great Britain), some amalgamations, 
notably of shipping lines, have been promoted, the workers have 
been " compulsorily arbitrated " a good deal, and each industry 
has been made to establish a " council." But, after all, the coal 
owners, the steel masters, the textile mill owners, and so on, 
of even the most individualistic countries have had trade 
associations for decades. (And from what one reads in Press 
reports, the fascist councils of industry engage in just the sort 
of work which such trade associations specialize in. For example, 
a recent meeting of one of the fascist councils passed a strong 
resolution protesting against the unequal balance of trade 
between Italy and Jugo-Slavia, just the sort of simple-minded 
protectionist resolution which the Birmingham Chamber of 
Commerce has been passing for years and years.) The London 



266 THE COMING STRUGGLE FOR POWER 

Times is, no doubt, in the right when it gives the following 
instance as typical of the real workings of the " corporative 
system." The extract is from the issue of February 29th, 1982. 

"A further instance of the collaboration policy in the 
industrial field, which is being carried out in Italy through 
the corporative system, is the special agreement reached at 
the Fiat Works in Turin. 

A further reduction of 10% in wages and salaries, which 
had been decided upon some time ago and then postponed, 
will be enforced from to-morrow." 

The old-fashioned British employer might perhaps be tempted 
to retort that he had long known how to cut his workers wages 
without calling it "a collaboration policy through the cor- 
porative system." 

Thus, the more elegant Italian theories of fascism, the 
Corporative State and all the rest of them, prove on examination 
to be just as much a set of catch-phrases as are the crude herd 
cries of the Nazis. The only difference is that the " national 
planning," " Corporative State," phrases are designed to catch 
intellectuals, and the " kill the Jews," " Nordic brotherhood " 
phrases are designed to catch shopkeepers. 

Thus, fascism has no theory, and needs no theory. For fascism 
is simply the bludgeon of the capitalist class, hard-pressed by 
the workers. Undoubtedly, however, fascism has a technique. 
Nor is it difficult to see where that technique has come from. 
The chief characteristic of fascism was, we saw, the creation of 
a mass party. And the parties which the fascists create are 
parties in the new and not the old sense of that term. They are 
not polite organizations of voters, such as the Conservative 
or Liberal parties in Britain used to be, for example. They are 
rigidly and elaborately constructed organizations, which attempt 
to capture the whole lives of their members. And when they 
obtain power, they utilize the State apparatus quite frankly 
as their instrument. There is no doubt that the fascists borrowed 
this technique from the communists. And, unquestionably, this 
borrowed technique has given them a great advantage over the 
older capitalist parties. 



FASCISM 307 

What estimate should be made of the utility of the fascist 
method as a last resort for hard-pressed monopoly capitalism f 
It would be absurd to deny that this weapon has proved very 
effective in Italy and represents a formidable menace to the 
German working class. And yet the dangers and difficulties 
involved in its employment by the directing capitalist groups 
are no less apparent. These difficulties all arise from the fact 
that monopoly capitalism seeks to enlist into its service, when 
it creates a fascist party, classes and elements whose interests 
it cannot possibly serve. The whole propaganda of every fascist 
party must be equivocal and contradictory from the start. 
Hence, the necessity, for example, for the fantastic contradictions 
of Nazi declarations. For the Nazis, from Hitler downwards, 
are recruited from the lower middle class in the towns and the 
richer peasants the German " Kulaks " in the villages. Now 
these are precisely the classes of the remaining independent 
producers for the market. They are classes which are to-day 
trapped between the better organized sections of the community, 
between the great integrated, capitalist monopolies, on the one 
hand, and the solidly built German trade unions, on the other. 
It is to tickle the ears of these followers that Hitler makes his 
passionate denunciations of " loan capital," on the one hand, 
and hints at the breaking up of the trade unions, on the other. 

All this seems to make the Nazis but strange instruments 
for monopoly capitalism ; for Hitler, of course, has derived 
most of his funds from just those monopoly capitalists whom he 
denounces. His chief paymasters are the coal and iron monop- 
olists of the Rhur. For the Rhur coal and iron masters are quite 
willing to put up with a few hard words which damp no blast 
furnaces in order to hire an army of thugs to break down the 
resistance to still more gigantic wage cuts of the German 
working class. But it is clear that if and when the Nazis obtain 
power, they can make not the slightest attempt to serve the 
interests of their supporters. They could only do so by at- 
tempting to restore some of the lost freedom of the market. 
And this would involve attacking just those great monopolists 
who are the true authors of the Nazi movement. It would 
involve deflation carried to a point hitherto regarded as utterly 
impracticable. If this could be done, the large monopolies would 



368 THE COMING STRUGGLE FOR POWER 

no doubt be forced to break up, production on the present 
large-scale basis would be paralyzed and would have to start 
again on a smaller, less-mechanized, more decentralized, basis. 
This is the only road to the economic paradise of the richer 
peasant and the petty shopkeeper. 

But the hands of the clock of economic events cannot thus 
be put back. A Nazi Government, far from imposing unparalleled 
deflation always the most unpopular measure any Government 
can take would be much more likely, at the bidding of its 
paymasters, to inflate, and so produce, if it is still possible, 
another hectic epoch of German big-business monopoly, another 
14 Stinnes era." In this way, an assumption of power by the 
Nazis could do much to promote the interests of German 
monopoly, at the expense of all remaining free producers. The 
most probable economic effects of a Nazi regime in Germany 
would be, therefore, the final destruction of just those elements 
which form the basis of the Nazi party. It does not necessarily 
follow that this would immediately destroy the hold of the Nazi 
leaders upon their supporters. But yet, in the long run, and more 
especially in a country such as Germany, where the opposition 
of the workers is very difficult to crush, so crass a contradiction 
must always prove a grave danger to the stability of the Fascist 
party. 

To sum up : we conclude that fascist parties represent a 
formidable weapon in the hands of the monopoly capitalists. 
But this weapon has a flaw in it. For it is constructed of elements 
the interests of which it must flatly betray. Hence, fascist 
parties must do their job the destruction of the organization 
of the workers quickly. If an obstinate, gallant and successful 
struggle against them can be maintained they will sooner or 
later reveal their inherent weakness. And the immediate future 
may- well reveal that a fascist party may in this case prove a 
menace to those who created it. 

It may be, therefore, that the most determined efforts of the 
capitalist class to hold power will be made, not by specially 
created fascist movements, but by the adoption of methods 
analogous to those of fascism, by the old official capitalist 
parties. A preliminary to such a manoeuvre is for the old parties 
to tend to fuse ; to form a single governing organization of the 



FASCISM 269 

capitalist class and this tendency is already well developed 
in Great Britain. Then at some appropriate moment, the forms 
of democracy can be quietly dispensed with, and the whole 
power of the State used to crush working-class organizations. 1 

1 A classic working model of how constitutional democracy can be slipped off 
was afforded by the Briining Government in Germany. As the London Times 
Berlin correspondent wrote on May 80th, 1032, when the Bruning Government 
went into power the establishment of an open dictatorship would have caused a 
severe struggle : by the time that Bruning had completed his work a dictatorship 
could " slip into the saddle," without anyone noticing any difference. But such 
successful manoeuvring requires the active collaboration of the workers' own 
leaders with the capitalists. We consider this question fully below. 



PART V 
THE POLITICAL STRUGGLE IN BRITAIN 



CHAPTER XV 
An Empire an the Defensive : the Role of Mr. Baldwin 

THE creation of fascist parties is, then, by no means the only 
expedient of the ruling class for maintaining their power in 
the final imperialist phase of capitalism. 

The alternative policy of the capitalists is to meet "the 
crisis," to meet, that is to say, the growing chaos of their system 
of production, and the growing challenge of the working class, 
by fusing the old capitalist parties, and transforming their 
character and methods. This policy has some important ad- 
vantages for any ruling class which has the skill to use it. It 
enables many more of the deceptive forms of democracy to be 
maintained : above all, it facilitates the transformation of the 
leaders of the workers' own parties into invaluable allies of the 
ruling class. 

If Germany and Italy have given us examples of the creation 
of fascist parties, the present policy of the British governing 
class is the leading example of this important alternative. This 
does not mean that the British capitalists may not be forced 
at a later stage to create a fascist party : but at the moment 
they are giving the " National Government " policy a full 
trial. It will be natural for us, therefore, in dealing with this 
alternative to discuss the course of the contemporary political 
struggle in Britain. It will be necessary to apprise the effects 
of the crisis in capitalist production upon the world position 
of the British Empire, and to attempt some estimate of the 
strength and weakness of that position. For it is only as seen 
against the background of a world empire, fighting an obstinate 
defensive struggle for existence, that contemporary British 
politics can be understood. We must also pay particular atten- 
tion to the character and leadership of the British workers' 
movement, for only so shall we discover why the workers, 
apparently both strongly organized and increasingly exploited, 
have not already made the existence of British capitalism 
impossible. 

In entering upon such a discussion, we must effect a sharp 
change in the focus of our eye. Hitherto, we have been looking 

SP 



974 THE COMING STRUGGLE FOR POWER 

at the long-term consequences of the basic economic factors 
of the present world situation. We have been establishing such 
propositions as that the concentration of production within 
every capitalist state has now reached the point when capitalism 
must be said to have entered a new phase the phase of mon- 
opoly capitalism, or imperialism. Such questions are, as it were, 
qualitative questions. We now come to the discussion of quan- 
titative factors. Instead of trying to find answers, as we have 
been doing, to the question of " How does history work ? " 
we shall be trying to answer the question " How long does it 
take history to work ? " We must try to qualify every " how " 
with a " how long." And this is an infinitely more complicated 
business. The time factor is always at once the most important, 
and the most indeterminate of all factors. 

For example, the time factor is all important when we come 
to consider the present position of the British Empire. Now 
there is little doubt that ifa principle the power of the British 
Empire is in decline. Great Britain is the Austria of the twentieth 
century. The stage of the nineteenth century was, it is true, 
the narrower stage of Europe : the stage upon which the complex 
tragedy of the twentieth century is being enacted, is the whole 
world. But, with this qualification, the parallel is obvious. The 
Austrian Empire was, and the British Empire is, a conglom- 
eration of extremely dissimilar parts : no ties of blood, religion, 
race, or tradition being common to these parts. Both have been 
the result of long processes of historical accretion, in which 
pieces and bits of territory have been slowly brought together. 1 
Both have been continually disturbed by nationalist movements, 
and at intervals by open revolts, in one or more of their parts. 
Both, from time to time, though reluctantly, have granted a 
greater measure of local autonomy, first to this part, then to 
that. 

It is not, however, in these actual resemblances, striking as 
they are, that the essence of the analogy is to be found. It is 
rather that both empires have passed through the same relative 

K * The British Empire, however, has been formed by much more violent methods 
j than was the Austrian. It used to be said that Austria had grown by successful 
" ' s, rather than by war. "BeUogerunt alii, tufelixAufltriAmibe." 



era said that about Britain. 



AN EMPIRE ON THE DEFENSIVE 375 

positions, the one to Europe, the other to the world as a whole. 
Just as Austria in, say, 1900, though still indisputably a great 
power, was equally indisputably waning and not waxing, 
relatively to the other great powers of Europe ; so to-day the 
British Empire, though still possessed of immense reserves of 
strength, is indubitably a waning and not a waxing influence in 
world affairs. There cannot be any serious doubt about the 
direction of this long-term trend. British power, even though it 
were to increase absolutely (and this is not out of the question) 
would certainly decrease relatively to the power of, for example, 
America and Russia. These, however, are but platitudinous 
considerations. Anyone (outside Great Britain) can see this 
obvious general trend. What is really of interest and importance, 
however, is the question of the rate of this decline. How long 
will the British Empire last ? How far has its decline gone ? 
(And on this, the relevant question, non-British opinion prob- 
ably makes as grave an error in one direction as does British 
opinion in the other.) Will, for example, the British ruling 
class succeed in effecting a marked temporary revival ? Will it, 
in the hope of effecting such a revival, pursue a policy of inten- 
sified imperial exploitation ? The successful application of such 
a policy as Empire Free Trade, for example, might well cause 
a temporary revival in British power. In so doing, however, . 
it would immensely intensify the rivalry between Britain and 
younger rival empires and thus almost certainly provoke 
war. Or, to put the question the other way round, will the 
British capitalist class suffer the slow and peaceful decline of 
British power without putting up a fight for their old position ? 
These are the sort of questions which are at once the most in- 
teresting and the most difficult to answer. We shall perhaps find 
the best indications of both the strength and the weakness of 
the British position by a consideration of the various policies 
represented by various groups within the British ruling class. 
The manoeuvres and intertwinings of British governing class 
politics are to-day somewhat complex. And this is itself a sign 
of the difficulties of the British position. These somewhat 
laughably sudden re-alignments, the adoption of social demo- 
cratic Prime Ministers by Conservative parties, the decline to 
impotence of one of the great capitalist parties, the fusion, 



976 THE COMING STRUGGLE FOR POWER 

whether temporary or permanent, of all sections, however 
relatively antagonistic, of the capitalist class into a National 
Government, these violent, and perhaps rash, attacks on that 
very friendly enemy the faithful Labour party, are not done 
for nothing : they are the storm signals of an Empire facing 
heavy weather. But all this at first somewhat baffling maze of 
splits, fusions, resignations, reconstructions, feuds and re* 
conciliations, is not so labyrinthine after all if we begin our 
inspection of it at the right place. 

Let us begin with the central block of British governing class 
opinion : let us begin with the Conservative party, and with 
that central core of the Conservative party which Mr. Stanley 
Baldwin both leads so wisely and personifies so perfectly. For 
then all the other sections, the raging, tearing, Empire Free 
Traders with Lord Beaverbrook ; the various shades of ex- 
liberals, even the remaining liberals ; the patriotic social demo- 
crats under Mr. MacDonald, the abandoned and excluded 
social democrats under Mr. Henderson, will all fall into their 
places relatively to the main Baldwinite mass. What policy, 
then, have Mr. Baldwin and the great party which he controls ? 
Whither is he leading the Empire which he rules ? When we have 
found the answer to these questions, we shall have discovered 
the basis of British policy. 

For it should now be apparent to even the most superficial 
observer that Mr. Baldwin is the dominating figure upon the 
British political stage. He is surely the one man of to-day who, 
in the perspective of history, will be found to have attained the 
stature of the statesmen of the heyday of British capitalism* 
And if his methods are more hidden, his effects less obvious, his 
triumphs less spectacular than those of a Peel, a Gladstone 
or a Salisbury, that is precisely because the problems with which 
he has to deal are more baffling and more menacing than any 
which faced his predecessors. His career has been extremely 
spectacular, because he has acted only once or twice during the 
whole course of it. And an analysis of it might be instructive. 
Here, however, our task is rather to discuss what Mr. Baldwin, 
and his followers, stand for to-day. We have already indicated 
that two main alternatives confront the leaders of the British 
Empire, In the first place* they can adopt a " forward " policy ; 



ON THE DEFENSIVE 877 

they can attempt to consolidate the British Empire as a great, 
preserved market for British entrepreneurs ; to reserve its raw 
materials for British producers. Nor is there any need to deny 
the strength which the successful achievement of such a policy 
would lend to British capitalism. Even to-day its Empire con* 
nections are of the greatest importance. The measure of Empire 
preference already achieved, not so much by means of preferen- 
tial duties, as by administrative methods in granting concessions, 
etc., such as Mr. Hawtrey describes, is a highly valuable asset 
to British entrepreneurs. This asset, and the direct tribute, 
representing interest on former loans to the Empire, are the 
factors which enable British industry, which is not more effi- 
cient, to pay considerably higher wages than are paid by most 
of its competitors. Thus it is quite obvious that if the products 
of foreign industry really could be excluded more or less com- 
pletely from Empire markets, an immense reinforcement for 
British industry would have been secured. But, alas for the 
British capitalist, all good things in this world have a price. 
And the price and the risks of a forward Empire policy are high 
and serious. In the first place, the exclusion by high tariffs of 
foreign foodstuffs and raw materials from Great Britain, which 
alone can bring in the Dominions, must mean a sharply in- 
creased cost of living. It will, therefore, be certain to increase 
the severity of the internal class struggle, already serious. 
Again, as we have already suggested, the coercion of the Crown 
Colonies would be a grave business. For example, Great Britain's 
best hope of retaining India at a not too prohibitive cost in 
blood and treasure, is no doubt, to make a bargain with the 
growing Indian capitalist class. But it is precisely these Indian 
capitalists whose interests would be most adversely affected by 
an " Empire economic plan. 9 ' For such a plan would necessarily 
have to assign to India the role of a producer of raw materials. 
In every considerable Crown Colony, too, a forward policy of 
imperial exploitation must create trouble. In Africa, for example, 
an effort rapidly to develop natural resources must lead to 
tribal revolts from natives, whose primitive ways of life would 
be suddenly disturbed. 

But if such a forward policy would cause trouble within the 
Empire, it would have much more serious consequences in the 



THE COMING STRUGGLE FOR POWER 

rst of the world. In order to envisage such consequences, one 
has only to imagine for a moment the reaction of America to a 
serious attempt to keep American goods out of the British Em- 
pire out of Great Britain, Canada and Australasia, for example. 
Nor would such a policy affect America alone. The most violent 
reactions must occur in Japan, for example, if her cotton goods 
were to be shut out of the markets of the British Empire. 
Again, the closing of the British home market would complete 
the ruin of Europe. Nor do powerful nations accept their ruin, 
or even their perceptible injury, without action. Their first 
actions would be in the nature of economic reprisals a ** tariff 
war " would ensue. Great Britain could, of course, refer to the 
fact that tariffs had always been erected against her : that she 
was now merely adopting the policy of her rivals. But such 
unanswerable debating points, when used in international con- 
troversy, usually exacerbate the dispute in exact proportion 
to their own excellence. Hence, it would be a most serious matter 
^ to attempt to apply a forward Empire policy with any vigour. 
It would, in a word, bring the British Empire into the double 
and acute danger of disruption from within and of attack from 
without. 

Naturally no one, outside the office of the London Daily 
Express, envisages the application of such a policy with the 
pristine crudity with which it was first announced. But it is 
often overlooked, even by the most " scientific " imperialists, 
that the penalties and dangers of a " forward " policy are exactly 
proportional to the benefits to be achieved. Strain on the co- 
hesion of the Empire, internal class friction in Britain, and 
hostility from the rest of the world, will inevitably be incurred 
to exactly the extent to which benefits for British industry are 
secured. It will be quite possible to go so slow that, for example, 
the situation will not be materially worsened in India ; serious 
trouble with the workers at home may be avoided, and the 
resentment of foreign powers kept below the point at which 
very grave economic reprisals are taken, certainly below the 
boiling-point of war : but, in that case, the benefits to British 
industry will also be inconsiderable. So much benefit, so much 
risk : the ratio is a direct one. 
What then is the alternative to a forward policy of intensified 



AN EMPIRE ON THE DEFENSIVE 870 

imperialist exploitation ? It is the policy of cautious inaction, 
which successive British Governments have pursued since the 
war. British post-war Governments, while getting every ounce 
of benefit which the Empire already gives and it is a very 
important benefit have attempted at the same time a policy 
of international collaboration ; have attempted to reconstruct 
the world free market. They have pursued a policy of waiting ; 
of hoping for better times ; of contemplating the remaining 
but solid advantages of the British position ; of unwillingness 
to jeopardise them for risky and problematical gains, however 
brilliant. 

To which of these policies does Mr. Baldwin adhere? It is 
perfectly characteristic of the man that we cannot give an 
unqualified answer to that question. He has hitherto followed 
the second and more cautious policy. But now it is clear that the 
National Government, which he, of course, really controls, is 
moving towards the forward policy. A tariff has been adopted 
in Great Britain. Agreements for mutual tariff preferences have 
been made with the Dominions at the Ottawa Conference. Thus ' 
Mr. Baldwin is showing himself too cautious even to be quite 
consistently cautious. He realizes that the situation demands 
some action. Reluctantly we may be sure, for he has a deeply 
rooted instinct that all action is prejudicial on the long view 
to British interests, he is moving towards an intensification of 
imperial exploitation. But we may be sure that such a forward 
policy will be conducted by the present Baldwinite National 
Government with far greater tact, deliberation and skill than 
it would be by the Empire Free Traders. 

And this was one of the principal reasons for the formation 
of the National Government. When the Labour Government 
broke up in the summer of 1931, it would have been perfectly 
easy for Mr. Baldwin to have taken office as the Prime Minister 
of a purely Conservative Government and to have secured a 
conservative majority. Such a prospect did not, we may be 
sure, invite him in the least. To have embraced it would have 
given him no real power ; on the contrary, it would have put 
him at the mercy of Lord Beaverbrook and his own uninstructed 
rank and file. The prospect of presiding for five years over- a 
purely Conservative Government, with a mandate to catfy 



tgO THE COMING STRUGGLE FOR POWER 

through any tarifflst Empire scheme, clearly appalled him. He 
knew that he would be no more than the crowned prisoner of 
men infinitely less wise than himself. He may have doubted 
whether he could have got through the five years without 
war itself. 

Mr. Baldwin, dreading impulsion from the right, stretched 
out his hand for counter-weights on the left. Nor were such 
counter- weights hard to come by. If Mr. Baldwin cared nothing 
for the appurtenances and appearances of power, and everything 
for the reality, Mr. MacDonald took a different view. He was 
entranced by the sudden suggestion from Buckingham Palace 
had not Mr. Baldwin seen the King just previously ? that he 
should lead a National Government. Several other competent 
liberal and social democrat politicians were readily, most readily, 
available. They were enraptured at the idea of serving as ballast 
(not that this was how it was put to them) in the Cabinet which 
Mr. Baldwin, with characteristic indirectness, was constructing. 
The National Government, both in its original and its recon- 
structed forms, beautifully served Mr. Baldwin's purpose. 
Instead of facing at the head of the Cabinet table, as their 
alarmed Prime Minister, two long rows of imperial Tory faces, 
woodenly bent on Empire Free Trade, Mr. Baldwin found 
himself quietly seated as one member of a nicely balanced Cabinet. 
A good sprinkling of the Empire Free Trade Tories were there, 
as they had to be, but they were nicely offset by the much 
greater abilities of Sir John Simon, Mr. Runciman, Sir Herbert 
Samuel, Lord Snowden, and the other moderating influences 
which Mr. Baldwin had recruited. (Almost the first act of the 
National Government was to pass an " Abnormal Importations 
Bill." And the conservative rank and file were so delighted at 
being able to exclude foreign greengrocery from Britain that 
they never noticed that Mr. Baldwin had quietly introduced 
into the Tory party the largest " abnormal importations " in 
history.) 

And how welhMr. Baldwin's new recruits are serving him ! 
Instead of being obliged himself to wage a desperate battle in 
order to keep his imperial champions within bounds, he can 
sit back and see the debating powers of his liberal and social 
democrat recruits doing the work for him. If pressed into a 



AN EMPIRE ON THE DEFENSIVE 281 

corner himself, he can always say that he would adopt the most 
extreme Empire measures with all his heart if it were not for 
the necessity of " preserving the national unity during the 
crisis." If the balance seems to tip a little more towards liberalism 
than he can expect his followers to stand, or a little more to- 
wards intensified imperial exploitation then he can expect the 
world to stand, he can redress it by a movement, almost im- 
perceptible and quite unnoticed. By the wonderful device of a 
National Government, he finds himself comfortably seated at 
the exact centre of a nicely balanced seesaw. If he had been 
Prime Minister of a purely Conservative Government, he would 
have found himself desperately trying to hold down one end 
of the seesaw whilst the other was weighted with almost the whole 
of the rest of his party. For it is their own supporters alone 
whom statesmen fear. 

There is something decidedly first rate about this manoeuvre 
of Mr. Baldwin's. To have seen that the only possible way to 
retain power was to appear to resign it ; to have hired Mr. 
MacDonald as the most suitable person to engage when one 
happened to want a Prime Minister at short notice ; to have 
thrown some of the highest offices of the State to one. or two 
hungry and efficient liberals, and then to have sat back knowing 
that Lord Beaverbrook's ace had been trumped once more, must 
have been a satisfying experience. Not that Mr. Baldwin does 
these things in a mood of personal emulation. He is deeply 
concerned for his class, or, as he thinks of it, his nation, and he 
is rightly conscious that he, almost alone, stands between the 
British Empire and the adoption of a policy the risks of which 
are too dreadful for him to contemplate. Nor, of course, does he 
formulate his policy in the theoretical and conscious way with 
which we have had to formulate it in order to discuss it. With 
him, it is all a question of instincts, traditions, inherent tend- 
encies. These are, no doubt, so strong in him that he never exerts 
himself much in thinking of the reasons for his actions. There 
is nothing, however, in the least unconscious about the subtle, 
and yet violent, methods by which he ensures that it is his 
will, once he has semi-consciously made it up, which prevails. 

One of his supporters once said that Mr. Baldwin's achieve- 
ments were always negative ; that he had spent his political life 



262 Tip COMING STRUGGLE FOR POWER 

almost exclusively in stopping things from being done, It is 
true; for Mr. Baldwin knows that the limits of profitable action 
in Britain are becoming narrower and narrower. The strength 
of the British Empire is still enormous, but it is an almost 
wholly defensive strength. He realizes instinctively that almost 
anything that anyone does will only make matters worse. He 
is the perfect statesman for an empire in decline ; he is for ever 
stopping things. He, in effect, attempts to stop the decline, and 
if he does not wholly deceive himself into believing that he can 
do that, he can at any rate, he knows, prevent it being im- 
measurably accelerated by the foolish actions of others. 

When Confucius was asked to describe the activities of the 
perfect ruler he replied that such a ruler " would sit gravely 
upon his throne, and that is all." He was, of course, prescribing 
for an empire in a completely stable condition ; a condition 
towards which the Chinese Empire has hitherto approximated 
the most closely. The period of decline during which Mr. Baldwin 
finds himself in charge of the destinies of the British Empire, 
does not allow of such perfect immobility in its ruler. But Mr. 
Baldwin moves as little as he can, and when he does move, it 
is always to prevent something from being done. 

Even caution, however, has its limits. Even after his superb 
manoeuvre in political counter-weighting, Mr. Baldwin finds 
himself compelled, if not by the pressure of his supporters, then 
by the real exigencies of the economic situation, to move to- 
wards a forward policy. For Mr. Baldwin is no pacifist. He does 
not suppose that war can be indefinitely averted. He knows, 
however, that war would be wholly disastrous to the British 
Empire now, and, that at all costs a respite must be obtained. 
Mr. J. L. Garvin, on the whole the most far-sighted of the 
theorists of British imperialism, probably expressed Mr. Bald- 
win's real views on the matter in a recent article. He was dealing 
with the Sino-Japanese conflict of 1982 and arguing vehemently 
against any proposals for interfering with Japan. His headlines 
explained very vividly why he considered that any active or 
interventionalist policy on the part of Britain would be disas- 
trous. They were " Keep out of War," " An Issue of Life and 
Death,'/ " Britain and Sanity." He finished his article with a 
paragraph, noteworthy for its clarity rather than its discretion. 



AN EMPIRE ON THE DEFENSIVE 888 

For he made it clear that, although he considered that Britain 
was in no condition to fight now, yet war must be her " future 
purpose." 

" Meanwhile," he wrote, " and at all costs, the British 
people must and will keep out of war. Lasting and universal 
peace is their moral desire. Twenty years' peace is their 
practical necessity. Carrying one-sided disarmament honestly 
to a hazardous degree ; reducing the Navy to a nucleus ; 
cutting down the Army to a minimum ; accepting mildly a 
preposterous inferiority in air-power ; and with a democratic 
financial system paralysing the old * sinews of war ' Britain 
before engaging again in the hideous gamble with human 
life and blood, must at least take some years to reorganize 
her whole national system if war is indeed to be the future 
purpose." 

Behind Mr. Garvin's pacific phraseology lies his passionately 
conceived design for a recovery of British world power. Behind 
the talk of British " moral desire " for lasting peace, is revealed 
the British " practical necessity " for twenty years' peace 
(later reduced to " some years " of peace). Behind the talk of 
disarmament, ludicrously untrue in the case of the British 
Navy, which has been " reduced to a nucleus " which costs over 
50 million a year and has still the largest fighting force of any 
Navy in the world, is revealed " the paralysis of the old ' sinews 
of war.' " And the reason for this paralysis is given : it is because 
of the heavy price (" the democratic financial system ") which 
has had to be paid to keep the workers quiet. And, at last, we 
are given almost nakedly the proposal that Britain must take 
some years to " reorganize her whole national system " (to get 
the workers well under control) " before engaging again " in 
the war gamble, " if war is indeed to be the future purpose." 
Really, Mr. Garvin, these things are thought but not said. Even 
if Mr. Baldwin was on the point of declaring war upon the whole 
world, he would not permit himself to talk like that. 

At any moment, however, the economic situation of Britain 
may become so acute that a more rapid drive towards a forward 
policy than Mr. Baldwin would be willing to lead, may become 



fig* THE COMING STRUGGLE FOR POWER 

inevitable* A point of crisis may be reached when wisdom 
itself may become too costly a luxury for the nation to afford. 
Statesmanship and caution themselves may come under the 
economy axe. If this point is reached, Mr. Baldwin's day will 
be over and the advocates of action will suddenly reappear upon 
the political stage. Mr. Churchill, Lord Beaverbrook, Mr. Amery, 
Sir Oswald Mosley, or perhaps other leaders who cannot as yet 
be discerned, will take over the helm. 

Of the leaders which we have mentioned, the last is something 
in the nature of a special case. Sir Oswald Mosley has both the 
advantages and the disadvantages of having become a fully con- 
scious and avowed fascist. He offers to the British capitalist class 
the reorganization of their dictatorship by way of the creation 
of a specifically Fascist party, as against the method of gradually 
" fascising " (if we may use such a term) their existing parties. 
This means, no doubt, that he must await his opportunity until 
the safer and more congenial method has been tried and failed. 
Such an opportunity may well sooner or later occur, however, 
unless the working class has in the meantime succeeded in 
freeing itself from the helplessness of social democratic illusions. 
We shall discuss this whole question below. Suffice it here to 
say that the leaders of the Labour party are at present using 
all their powers to ensure that the workers should be so power- 
less, so castrated, that a fascist dictatorship would be the in- 
evitable result of the crisis of the class struggle in Britain. And 
there would certainly be a fateful justice if the ex-Ministers of 
the 1929 Labour Government should live to be prescribed by 
the man whom they so despised when he was their colleague. 
Sir Oswald Mosley has come to stand for fascism naked and 
unashamed. But, in this, he differs from the other leaders of 
the British ruling class by the frankness of his statements, and 
the extreme brutality of the methods which he already advocates, 
alone* 

We must not, however, forget the real purpose behind the 
whole drive toward intensified imperial exploitation. Its object 
is to enable the British capitalists to avoid adopting the advice 
of their foreign "well-wishers" to reduce the standard of life 
of every class : to avoid resorting to smaller-scale, less capital- 
istic, methods of production. The reduction in the national 



AN EMPIRE ON THE DEFENSIVE 285 

wealth which must at once result from a resort to such a policy, 
would immediately reduce British power : and a reduction in 
their power would in turn, immediately reduce the British 
capitalists 9 opportunities for acquiring future wealth. A vicious 
circle would be set up, the operation of which would very quickly 
transform Britain's position, and reduce her to an unimportant 
and impoverished state. It is to avoid so dire a consequence that 
the policy of intensified imperial exploitation will be in the end 
wholeheartedly adopted. It will be adopted just so soon as it 
is clear that there is no other way in which the world position 
of Great Britain can be preserved. 

It would be idle to speculate as to the leadership which the 
British capitalist class will find for their ultimate adventure. 
But the policy of action when once it has been adopted, will, 
no doubt, be vigorously pursued. Nor, and here is perhaps the 
most fateful aspect of the whole situation, will it lack initial 
success. Just as there is very little realization in Great Britain 
of the fundamental gravity of the position of British capitalism, 
so amongst the ruling classes of the other great powers there is 
an immense exaggeration of the extent of British decline. 
(Each national capitalist class is as sharp-eyed as any revo- 
lutionary to detect the weak spots in any capitalism but its 
own.) 

The immediate position of Great Britain is indeed in one 
sense very strong. For all that has so far happened is that her 
difficulties have compelled her to resort for the first time to 
courses, such as currency depreciation, tariffs, and intensified 
imperial exploitation, which other states have adopted years 
ago. It is admittedly a sign of growing weakness that Britain 
has had to adopt these courses. But the fact that she has only 
now adopted them : that she can still utilize them to the full, 
is a sign of great remaining strength. For these policies are like 
drugs : their application really does relieve the condition of 
the patient ; but if they are taken for too long a period, or in 
excessive doses, they themselves begin to produce symptoms 
worse than the original disease. Thus it is an important imme- 
diate advantage to Great Britain that she has only just begun 
to need them. In the case of tariffs, for example, most other 
nations must be compared to insomniacs who are so dosed with 



2S6 THE COMING STRUGGLE FOE POWER 

opiates that their doctors dare give them no more ; and if Britain 
too has now lost the power of natural sleep, she can still safely 
be given the drug. At the moment of writing, Britain is showing 
distinct signs of the extent of these reserves of strength. They 
are all in the last resort, of course, the result of her very long 
predominance. Britain has unparalleled reserves of fat which 
she can live on for very much longer than many observers 
suppose. Her Empire, so long as she can hold it together, will 
repeatedly give her sudden and remarkable assets. (For example, 
at the moment of writing, the release of India's hoards of gold 
is benefiting Great Britain, because of her hold over India.) 
All these measures, are however, strange drugs in one respect. 
For they only do the patient good by harming everyone else. 
Hence they will and we are now thinking of their wholehearted 
application by the advocates of action both increase Great 
Britain's strength and exacerbate her relations with the rest 
of the world. And that is the danger-point. There will arise 
precisely one of those situations when a country's prestige, 
when its reputation for strength, that is, deviates from its real 
strength. And Mr. Hawtrey discovered that this situation was 
the immediate cause of the outbreak of war. The undeniable 
fact of Britain's long-term decline over the decades will have 
blinded the eyes of, say, the French or the American or the 
Japanese ruling classes to the possibility of a sharp rally in 
British strength over the years. Such a rally (there are some 
signs of one at the moment) will have emboldened the British 
imperialists to seek to attempt some policy the still more 
rigorous exclusion of foreign goods from the Empire market, 
let us say, which would enable them to carry the recovery a 
step further. The vision of reversing the whole process of de- 
cline, of reasserting the old British predominance, will float be- 
fore their eyes. The same vision and it will be to them a menace 
will occur to Britain's rivals. The application of the new 
British policy will become a test issue. The estimates of the 
true relative strength of Britain and her rivals will vary wildly : 
there will be no objective way of measuring them. Is India to 
be considered as an asset or a liability ? Are the British workers 
infected with anti-patriotic, communistic ideas or not ? Is the 
American (for America is, of course, the most likely antagonist) 



AN EMPIRE ON THE DEFENSIVE 287 

fleet reaHy inefficient ? Will Japan take the opportunity to at** 
tack from the Pacific ? A dozen such questions will be answered 
confidently and with a perfect disregard of the facts (which 
cannot in any case be ascertained) according to the wishes of 
the conflicting parties. Solemn British memoranda will prove 
American impotence : equally solemn American memoranda will 
prove British decadence. Each side will feel that to yield now 
will make it incomparably harder to avoid the necessity of 
yielding on future occasions. Yet to yield on a series of occasions 
will quickly reduce the party which does so to impotence and 
poverty. What alternative will there be to war ? l 

We may conclude that, when the advocates of action get 
power in Britain and begin to apply a policy of intensified 
imperial exploitation, war either with America, or with a coal- 
ition of other powers, or with Russia (which is a special case 
which we shall notice later) will not be indefinitely postponed. 

The reader will have observed that the assumption has been 
made that the only form of remedial action which is open to 
the British ruling class is an intensification of imperial exploit- 
ation. The British choice, it has been assumed, lies between a 
forward empire policy, and inaction leading to an acquiescence 
in decline. Now this assumption may seem at first sight arbi- 
trary. It will be objected that there are all sorts of " economic 
reforms " which could benefit the British position. Some of 
these reforms have already been mentioned, e.g. the introduction 
of tariffs, " industrial reorganization " (i.e. the formation of 
monopolies) and the like. And, it will be said, it has already 
been admitted that these reforms are efficacious, at any rate 
in the short run. For our purposes we have included such mea- 
sures under the heading of imperialism, as in fact we are bound 
to do if we accept the view expressed throughout these pages, 
that imperialism is monopoly capitalism. Thus these measures 

1 Sir Arthur Salter has no illusions as to the inevitable consequences of an 
aggressive British policy, although he sees that Britain may well be forced to 
adopt it. He writes : 

41 As the world closed against her Great Britain might be forced to supplement 
such preferential trade with the Dominions and India as may be practicable 
with a policy of exploiting and closing in her own Self-Governing Empire from 
the vest of the world. . . . This line of development would mean an organisation 
of the world into separate units and groups which would soon be dangerous and 
ultimately fatal to world peace I " 



388 THE COMING STRUGGLE FOR POWER 

must be regarded as indissolubly associated with the imperialist 
drive. And there really are no other measures of any substantial 
value in which the British governing class can itself take the 
initiative. 

All other reforms, the suggestions of Mr. Keynes, the elaborate 
" policies " of the Liberal and Social Democratic parties, fall 
into one or other of two categories. Those which could theo- 
retically improve the position, depend upon international co- 
operation ; they are, in effect, proposals designed to restore the 
world free market. We have already suggested the final im- 
practicability of such a policy. 1 Those reforms, on the other 
hand, which could be undertaken by Great Britain alone, are 
all based on fallacies, (such as those of the currency cranks) as 
to the nature of capitalism : their effect would either be nil, 
or they would result in an ordinary inflation of the currency 
with exchange depreciation, which is a special, and particularly 
dangerous and drastic, form of protection. Therefore the alter- 
natives which face the British ruling class are intensified 
aggression abroad, combined, of course, with intensified 
exploitation of the worker at home, and doing nothing. 

This conclusion was implied in a speech delivered in the spring 
of 1982 by Mr. Lloyd George on his return to public life after 
an illness. Mr. Lloyd George is by far the most vigorous and 
lively minded, if by no means the wisest, remaining British 
statesman. He like Mr. Baldwin feels the fearful risks, both of 
ift$ernal class conflict and of external attack, which Britain is 
incurring by her turn towards intensified imperial exploitation. 
He shows that he understands perfectly the indissoluble con- 
nection between tariffs and war. 

" Free trade is not merely a fiscal issue," he said, " Free 
trade is not merely an economic issue. It is a great human 
issue. It is the issue of peace on earth and good will among 
men. Tariffs and armaments grow together side by side. 

1 This does not mean that the world market may not recover to some extent 
from the state of utter disorganization which it has got into at the time of writing 
(summer 1982). For if it did not, a general collapse of capitalism during this 
particular slump would ensue : and this we do not, as we have already argued, 
nticipate. What is suggested, however, is that the world market Witt be move 
injured in each slump than it is reconstructed in each boom. There can be nothing 
more than temporary recovery. 



AN EMPIRE ON THE DEFENSIVE 289 

You build one up and the other goes up and up and up until 
the world is encircled, and within those walls armed men are 
pacing ready for the destruction of their fellow-creatures. 
Free trade is a great issue of peace on earth " (the London 
Times report). 

This is all in a sense true. But it is also quite academic. For 
when Mr. Lloyd George proves that tariffs inevitably bring war, 
he is not proving that capitalism must avoid tariffs, for that is 
no longer possible. He is merely proving, what the avowed 
protectionist Mr. Garvin sees so well, that capitalism must bring 
war. For Mr. Lloyd George has absolutely no suggestions to 
make for an alternative form of action to save the position of 
the British capitalist class. Must we not doubt, then, whether 
Mr. Lloyd George is fair in accusing British conservative states- 
men of thinking too much of revolution ? 

" Statesmen," he said, " in my judgement to-day have 
their minds too exclusively fixed upon the dangers of revolu- 
tion. What they don't understand is that reaction is the 
surest way round to revolution." 

But can the capitalist statesmen of to-day think too often of 
revolution ? For reaction has become absolutely inevitable ; 
and, on Mr. Lloyd George's own showing, reaction can have only 
one end. Naturally, therefore, the statesmen of to-day mu$t 
think far more of revolution than did the men of Mr. Lloycl 
George's generation. The utterances of Mr. Lloyd George have 
great interest ; but they have a wholly historical interest. They 
serve merely to remind us of what liberalism was like when 
capitalism could still afford to be liberal. 

There is, however, one other type of measure, besides in- 
tensified imperial exploitation, which British capitalism can 
resort to ; and this is a direct attack on the standard of life of 
the workers at home. It goes without saying that such measures 
are being resorted to, and will be resorted to, to an ever- 
increasing degree. But such measures of direct attack upon the 
workers at home can hardly be regarded as efforts to improve 
the position of British capitalism ; they are rather the obvious 

TP 



290 THE COMING STRUGGLE FOR POWER 

symptoms of its decline. (And they suffer from the further 
defect that they are difficult to enforce in a state still nominally 
democratic.) Thus, we come back to the conclusion that a 
choice weighted with the destiny of the world faces the British 
ruling class. Shall they tamely acquiesce in decline for an 
indefinite period? Or shall they mobilize their still vast re- 
sources in order to attempt to retrieve and consolidate their 
position at the expense of the rest of the world ? In the last 
resort, no doubt, they will have no choice. However much they 
may try to keep to the path of caution, however tightly Mr. 
Baldwin may cling to the reality of power, sooner or later they 
will have to fight. For the moment will come when it will be 
inescapably clear that they will lose all if they do not ; and that 
every year of postponement prejudices their chances of success. 

Capitalism, then, if left undisturbed, must certainly produce 
the next round of that clash of empires which we saw to be its 
next stage of development. It would be idle to speculate over- 
much on the combatants in the next imperialist war, or on its 
result. But we cannot but feel fairly clear that the result must 
be unfavourable to Great Britain. 

Moreover, it would be wholly misleading to suggest that 
capitalism will be allowed to fight out its next imperialist war un- 
disturbed. Already capitalism faces at least four acute and closely 
interrelated menaces, which are certain to grow, and which will 
result in a conflict between capitalism, on the one hand, and the 
workers, on the other, long before capitalism has had time to 
fight out its hideous inter-imperial tournament for the domina- 
tion of the world. These factors will surely cause a conflict 
between classes to break out simultaneously with the next large- 
scale inter-imperialistic war. Indeed, their growth may easily 
be the occasion for that outbreak. We may perhaps list these 
factors, somewhat arbitrarily, as follows. 

In the first place, there exist in the world to-day certain acute 
capitalist " weak spots." There are areas in which for various 
reasons capitalism has never been able to get a firm hold since 
tht war. One such weak spot consists in the clutter of petty 
states which now make up Eastern and Central Europe. In these 
states, the present political settlement, although vital to the 
dominating European power, France, forbids successful capitalist 



AN EMPIRE ON THE DEFENSIVE 291 

recovery. A second related but distinct weak spot is Germany. 
Here again the interests of a particular capitalist power conflict 
sharply with the interests of capitalism as a whole. And it has 
been the interest of the particular power, France, in Germany's 
permanent weakness which has on the whole prevailed over the 
general interests of the world capitalist class in Germany's 
recovery. Another type of weak spot is typified by Spain, a 
country in which capitalism has only now just completed its 
struggle against feudalism. (Spanish capitalism is certainly 
coming in towards the end of the third act of the play !) 

A second and distinguishable menace is the failure of the 
great empires to continue to exploit their colonies without 
causing strong nationalist movements of liberation in which the 
colonial capitalist class itself leads the revolt. On this question, 
also, the capitalist classes of the world cannot secure a united 
front amongst themselves. India affords the stock example of 
this difficulty. The case of China is somewhat different. China, 
though to-day definitely a subject nation, is not the colony of 
any one particular power. She is a colony of capitalism in gen- 
eral. Hence, " a grab for China " is clearly developing in this 
century just as " the grab for Africa " developed fifty years ago. 
But conditions in the China of to-day are very different from 
those of Africa in the nineteenth century. Not only is China to 
a certain extent a united nation, with the greatest tradition of 
civilization in the world behind her ; not only has she a strong 
national capitalist movement which does not intend to allow 
foreign capital to do all the exploiting of the Chinese workers 
and peasants, but she has, in whole areas of the interior, strongly 
entrenched Soviets of these workers and peasants who do not 
intend to let anyone exploit them. The exploitation of China 
presents a problem which capitalism has not yet been able to 
solve. For some imperialist power has always been pursuing a 
policy of conciliation and common interest with the Chinese 
capitalist class, just when another has decided on a policy of 
repression. 

The third menace is the existence for the first time in modern 
history of a non-capitalist power. The growing economic strength 
of the Soviet Union is becoming every day a more serious chal- 
lenge to capitalism. And in this case, also, it has been impossible 



292 THE COMING STRUGGLfc FOR POWER 

to secure sufficient inter-capitalist unity to pursue any common 
policy towards Russia. One empire has been all for armed inter- 
vention, just when another has been out for trade and vice 
versa. The particular interest has as yet always taken precedence 
of the general. 

Lastly, there is the fact that at the centre of every great 
capitalist empire there is an increasingly exploited, dissatisfied, 
insecure and unemployed, working class, which is becoming 
ever more rebelliously inclined. This is the fundamental factor 
in the whole situation. Indeed, when one envisages the stand- 
ards on which the workers of the weaker capitalisms of Europe 
are forced to live, compared to the visible potentialities of pro- 
duction, and the terrifying insecurity of even the comparatively 
well circumstanced workers of the great dominant empires ; 
when the high standard of working-class education, and the 
intensity and long duration of working-class self-consciousness, 
reflected in numerically powerful working-class movements, are 
all taken into consideration, we are astonished that capitalism 
has not been decisively challenged already. We shall not, how- 
ever, be in a position to assess the actual weight of this last 
menace to capitalism until we have given some consideration 
to the nature of existing working-class organizations. This we 
do in the following chapters. 



CHAPTEB XVI 
The Nature of Social Democracy 

WHAT, then, is the character of existing working-class organiza- 
tions ? What part do the political parties and the trade unions, 
which the workers have built up, play in the life of the world 
to-day ? 

Now there is not the slightest doubt that the political parties, 
and the trade unions, which are to-day typical of the labour 
movements of all European countries, grew up as the direct 
expression of a working-class revolt against capitalism. Nor is 
there any doubt as to the strength and persistence of that revolt. 
When the difficulties and perils of working-class organization 
in the last century are remembered ; when the immense and un- 
shaken prestige, en joyed by the apparently triumphant capitalist 
class of seventy years ago and their rigorous domination of every 
aspect of life, religious, educational, economic and social, are 
envisaged, we cannot fail to realize that it required the strongest 
determination to build up the organizations comprising the 
labour movements of the different capitalist states as we know 
them to-day. The very existence of these extensive organiza- 
tions proves that during the last seventy years the working- 
class of all Europe has made unnamed sacrifices and unchron- 
icled efforts to create effective instruments for its struggle against 
capitalism. If, therefore, these instruments of working-class 
struggle, the Labour or Social Democratic parties, and the 
official trade unions, have now been perverted in the most as- 
tounding way, their creation nevertheless represented a stub- 
born and unquenched revolt of the workers, which has persisted 
during the last three-quarters of a century and has affected 
every state in Europe. 

This fact must never be forgotten. Even if these organiza- 
tions have now become, as we shall 
principal and essential bulwarks of capit 
of the trade unions and Labour parties ] 
used, not by the workers to oppose tl 
capitalists to control the workers ; if 
have become the trusted, and petted,! 




294 THE COMING STRUGGLE FOR POWER 

Governments, yet that does not mean that the workers' revolt 
against capitalism, which originally created these organiza- 
tions, was not, and is not, formidable and unappeased. 

The history of the words " social democracy " which, on the 
continent of Europe is the most general term used to describe 
these long-established workers' organizations, epitomizes the 
transformation which they have undergone. Until the year 1914 
the word meant, to friend and enemy alike, the revolutionary 
movement of the working class. We find it used in this sense in 
the earlier works of Lenin, for instance. With the break-up of 
the Second International, comprising all of the Social Democratic 
parties of Europe, and the entrance of the most prominent 
leaders of those parties into the war governments of their 
respective capitalisms, this sense of the term became obsolete. 
And Lenin, in 1917, formally repudiated it, recognizing that a 
new term with which to denote revolutionary working-class 
parties was necessary. He naturally chose the term communist, 
since by so doing, he was but returning to the terminology used 
by Marx and Engels in the 1848 period of intense working-class 
activity. 1 Hence, social democratic has become an epithet 
reserved for the official, non-revolutionary, Labour parties 
into which the old revolutionary working-class movement 
developed after the war. Needless to say, the term is here used 
in this new, post-war, sense. 

It is only by means of an analysis of the present condition of 
social democracy that we shall find the solution of the problem 
which we raised at the end of the last chapter ; the problem of 
how it was that the workers, apparently at once extremely 
discontented and well organized, did not offer an immediately 
decisive challenge to the existence of capitalism. This problem 
becomes all the more striking when we realise that powerful 
working-class movements, all ostensibly anti-capitalist, have 
held political power in many of the states of Europe during the 
past decade. And that all of them have exercised, everywhere, 
and during the whole period, a very great measure of power. 

Indeed, it is not too much to say that Western European 

1 It is now being forgotten that the term social democracy ever had a revolu- 
tionary meaning. Yet, in 1914, when Lenin heard that the German social 
democrats had voted war credits, he refused to believe the news for several days. 



THE NATURE OF SOCIAL DEMOCRACY 295 

politics are to-day dominated by Social Democratic parties. 
This is the epoch, the heyday of social democracy at least for . 
Europe. (Russia is beyond this stage of development. America 
has not reached it.) Now in every country the characteristics 
of this epoch are the same. Briefly, it may be said that in the 
epoch of social democracy the workers are in office everywhere 
and in power nowhere. 

Social democracy is the same everywhere because it is the 
type of working-class organization consistent with a particular 
phase of economic development. For example, in comparison 
with the extreme diversity of economic conditions in the rest 
of the world, the nations of Western Europe are in the same 
stage of development. Accordingly, we find that to-day the 
working-class movements, in each of them, are of a very similar 
character. The social democrats of Germany, the Labour party 
in Great Britain, the Socialist party in France, the socialists or 
social democrats of Holland, Sweden, Czecho-Slovakia, and the 
smaller nations, are each the national expression of an identical 
political movement. These national movements are linked 
together by the Labour and Socialist International. This, 
indeed, is the feeblest of bodies ; it hardly pretends to unite its 
constituent parties. Indeed, these parties make a great virtue 
of the fact that they are good, patriotic national parties free of 
all '* foreign domination." Hence, their undoubted similarity 
is not the product of any conscious unity but is the automatic 
result of their similar origins. 

For identical characteristics brand, and an identical destiny 
awaits, all these movements. Even the minor differences which 
these national Social Democratic parties do display correspond 
very closely to the comparatively minor differences in the 
economies of the national capitalism, with which they co-exist. 
Thus post-war social democracy could, and did, come to its full 
flowering in Britain and in Germany alone, for a flexible, large- 
scale capitalism has, in Britain and in Germany alone, arrived 
at, and passed, its maturity. The French socialists, on the other 
hand, bear all the marks of the comparatively small-scale 
methods of their capitalism : and their days of influence and 
office will probably be shorter. While in the still more primitive 
economy of Italy, a young Social Democratic party was hustled 



W6 THE COMING STRUGGLE FOR FLOWER 

off untimely to its grave before ever its hands touched the sweets 
of office. The character, then, of Social Democratic parties seems 
to be closely dependent upon the character of the particular 
national capitalism under which they exist. They do not fully 
flourish unless their capitalism has come to full maturity. 

Thus, even at first sight, Social Democratic parties do not 
to-day seem to be mainly or altogether the expression of a 
working-class revolt against capitalism. For if they were, they 
might be expected to flourish in an inverse ratio to their 
capitalism. Yet we find in practice that their success appears to 
vary in direct ratio to that of the capitalism on which they 
depend. 

Admittedly, however, a Social Democratic party needs for 
its growth something more than a still functioning capitalist 
system. (America has that, and yet knows no social democracy.) 
It needs for its growth a capitalism, sufficiently old for the vast 
majority of its possibilities of development to have been already 
exhausted : with its arteries so hardened that a working class 
has developed which has already seen that there is very little 
hope of any significant number of its members climbing out of 
their class : a working class, which has begun to look outside and 
beyond capitalism for its possibilities of development. For a 
long time, however (and in this fact lies the first secret of social 
democratic power), for just so long, indeed, as the national 
capitalism in question continues to function without sharp, 
intolerable crises, such a working class will only look outside of 
capitalism. It will never go outside of capitalism. Its " fantasy 
life " alone will become socialistic. Such a working class, living 
in an old, slowly declining, but still rich capitalism, may for a 
long time, and to a very complete degree, separate its words 
and thoughts from its actions. In these conditions the workers 
may become intolerant of anyone who does not use socialistic 
phraseology when addressing them. The whole terminology of 
their politics may become socialist. The affirmation of socialism 
may become a prerequisite for the politicians who lead them* 
(Our old friend " the nationalization of the means of production, 
distribution and exchange " will appear on all party programmes 
and trade union rule books.) The mildest trade union officials 
will often be required to breathe ferocities from the platform. 



THE NATURE OP SOCIAL DEMOCRACY 297 

A thousand times will the workers' enemies be slain with words. 
And all the while the real life of such a working class may go on 
quite as usual, very tamely and quietly, within the limits set 
for it by capitalism. As the national capitalism in question 
declines those limits will grow narrower. If only, however, the 
process is reasonably gradual, nothing will happen. The oratorial 
socialism of the labour politicians will become more pronounced 
in nice proportion as they are driven by the exigencies of capita- 
list decline to make their actions more reactionary. A kind of 
verbal socialism a socialism of the hereafter will be 
established amongst wide circles of the workers. And such a 
verbal socialism may actually make them support the more 
easily the hard, and ever more hard, conditions of capitalism* 
For verbal socialism, like religion, can in these conditions become 
the opium of the people. Nor will those workers who have been 
effectively drugged with the socialism of the hereafter thank 
anyone (so long as these conditions last) who attempts to dispel 
the fantasy. (How could it be otherwise ? Do we ever thank the 
man who seeks to wake us from warm dreams to cold reality ?) 

It is in these economic and psychological circumstances alone 
that Social Democratic parties flourish. And such have been the 
conditions of Great Britain and the other nations of Western 
Europe sinc6 the war. Accordingly we have had the high noon 
of the Labour parties the period of the MacDonalds, the 
Snowdens, the Hendersons, and, on the trade union side, the 
Ernest Bevins, the Thomases, the Clyneses, and their precise 
Continental equivalents. In the post-war decades these men 
have been dressed in their little brief authority : and 
undoubtedly they have succeeded in making the capitalists 
laugh. 

Thus, the Social Democratic parties, although they were 
created to express the workers' revolt against capitalism, have 
to-day another purpose and character. They have indeed, many 
functions, which we shall consider, but their psychological 
function is to cater for a subjective need of the workers in the 
developed capitalist countries. They satisfy the workers' need 
to dream of socialism, whilst remaining tied to capitalism. And 
they do this with great skill. 

Indeed, all things considered, the factor that needs explanation 



98 THE COMING STRUGGLE FOR POWER 

is the brevity and insecurity of the social democrats' periods 
of office. It was suggested that our period was one which found 
the representatives of the workers everywhere in office, but 
nowhere in power. Such a statement is truer to reality than to 
form. For instance, the period in which the social democrats 
have held office in Germany since the war is only three or four 
years out of thirteen. For the whole of the post-war period, 
however, Germany has been, in fact, dominated by the Social 
Democratic party. No Government has been able to secure a 
majority in the Reichstag without its support. And in a far 
deeper sense, Government, Capitalist Government, that is, 
would have been quite impossible in Germany, but for the con- 
trol which the massive social democratic machine has exercised, 
both industrially and politically, upon the German workers. 
Only the truly marvellous grip of that machine, based on its 
close knowledge of the psychological needs of the upper sections 
of German workers, and its ability to satisfy those needs to per- 
fection, in fantasy, could possibly have induced the advanced 
German masses to suffer in reality the unparalleled sacrifices 
and humiliations which a hard-pressed German capitalism has 
had to demand of them. Certainly we may say that in the real 
and deepest sense, German social democracy has been in power 
ever since the war. 

In Britain, the Labour party social democracy, that is, 
expressed with an appropriately anglicised accent has actually 
held office only for about thirty-five months since 1918. (And 
that short day is very likely over.) Yet here again it would be 
a great mistake to underestimate the part which the Labour 
party has played in post-war politics to estimate it by the 
length of its periods of office, or, worse still, by its legislative 
achievements. For in Britain, too, it is the Labour party which 
has been the main and necessary support of the existing system 
the essential party of the State without which " the King's 
Government could not have been carried on." And certainly the 
stupider kind of capitalists have recently shown the Labour 
party a gross ingratitude to deal it such a blow as they dealt it 
at the general election of 1981. Such backward representatives 
of the British ruling class still deplore the existence of the Labour 
party because they remember the halcyon days of British 



THE NATURE OF SOCIAL DEMOCRACY 299 

capitalism, when, even after the granting of the franchise to a 
large proportion of the workers, no even nominally separate or 
independent workers' party arose. Certainly they are right in 
believing that such a state of things, when the two great capita- 
list parties could themselves command the alternating support 
of the masses, was, for them, a preferable state of affairs. For 
it meant that the British workers were so dominated, and so 
satisfied, by capitalism that they did not look even in fantasy 
outside and beyond it. 

Those were, indeed, the good old days. What, however, these 
duller elements of the ruling class fail to realize, is that this 
golden age can never be regained : that this is not the alternative 
to the Labour party. The abler capitalists know perfectly well 
that the psychological grip of capitalism upon the majority of 
the British workers has in one sense irrevocably slipped. They 
know that some separate working-class party must inevitably 
have arisen as a response to the urgent need of the British 
workers to dream, at any rate, of some alleviation of their lot. 
How altogether felicitous, therefore, was it that the working- 
class party which did emerge turned out to be of the most in- 
nocuous character conceivable ! Its socialist phraseology was 
strongly counterbalanced by the sturdy, the rigid, conservatism 
of its actions. What more marvellous mechanism could con- 
ceivably have been devised for drawing off into channels, which 
led nowhere, those waters of working-class dissatisfaction which, 
dammed back, might have broken the social dyke? For con- 
sider the result. A very extensive political machine has been 
created. Hundreds of competent orators tour the country with 
unexampled frequency, expressing, liberating, and thus very 
largely dispersing, the anti-capitalist impulses of the workers. 
Many thousands of trained trade union officials follow in their 
footsteps, gathering the workers into industrial organizations 
which work in the very closest touch and co-operation with the 
employers. 

For a Social Democratic party really is a class party, however 
much some of its own leaders, in a frenzy of conservatism, may 
deny it. If it were not, it could never have arisen, for it is nothing 
but the expression of the first independent political activity of 
the workers breaking loose from liberalism. Moreover, it is a 



800 THE COMING STRUGGLE FOR POWER 

working-class party because it is predominantly financed, not as 
all capitalist parties must be, by the capitalists, but by the 
trade unions. And, however reactionary the trade unions may 
become, however great an obstacle they are, under corrupt 
leadership, to the possibility of working-class advance, they are 
in their very essence working-class institutions. Indeed, unless 
the whole social democratic machine was in quite a real sense 
working-class, it would be unable to fulfil its function. It would 
be unable, any better than an ordinary Liberal party, to cater for 
the increasingly anti-capitalist mood of the workers. The essence 
of a Social Democratic party is that it does cater for just these 
impulses : that its orators use socialist phraseology : that its 
street agitators thunder against capitalism as fiercely as any 
revolutionary : that its trade union officials preach the opposi- 
tion of the interests of employers and employed like so many 
Marxian scholars. 

A strong force of working-class opposition to capitalism is 
thus collected : a force quite sufficient to make the continuance 
of the senile capitalisms of Western Europe impossible, if the 
leaders of social democracy dreamt of using it for such a purpose. 
But have no fears, Ladies and Gentlemen ! It was for very dif- 
ferent ends that all this sound and fury was developed. When 
a Social Democratic Government is returned by the efforts and 
sacrifices of the workers, the legislative programme which it 
introduces, turns out to be the most weary, stale, flat and un- 
profitable liberalism : turns out to have nothing whatever to do 
with the socialism of the street corner : turns out to be simply an 
attempt to bluster or cajole a few more concessions from capital- 
ism. It is the same story in the case of the trade unions. For 
example, after nearly a century of tireless effort, the mass of the 
British workers were, by the second decade of the twentieth 
century, mobilized into trade unions. Their power was very 
great. And at the same moment, the decline of the rate of profits 
drove the British capitalists to attempt to lower the whole 
standard of life of the British workers. And then it was seen that 
the British trade union machine, the creation of which was 
perhaps the greatest achievement of any working class under 
capitalism, was being used, not to prevent the attack upon the 
workers by the only method which it could now be prevented. 



THE NATURE OF SOCIAL DEMOCRACY 801 

namely, by the overthrow of capitalism, but to minimize, to 
deflect and, in 1926, definitely to betray, the workers' resistance. 

Thus the secret of political social democracy is to use the 
appeal and dynamic of revolutionary socialism, but to use it in 
order to implement a programme of most mediocre liberalism. 
And the secret of industrial social democracy is to mobilize the 
industrial strength of the workers, but to mobilize it for trivial 
and in the end reactionary purposes. 

Two very important difficulties arise in the carrying out of the 
political side of this policy. And it is these difficulties which 
account for the comparative brevity of the time which Social 
Democratic parties have actually held office. The first difficulty 
is the very obvious one that the workers, whose votes have been 
won, whose enthusiasm has been roused, whose pennies have 
been collected, by socialist agitation, will surely be bitterly dis- 
satisfied with mildly liberal measures as the only result. And 
indeed this is a delicate matter. Almost the whole of social 
democratic " statesmanship " is, in fact, concerned with the 
turning of this somewhat awkward corner. It is with this ques- 
tion that innumerable " confidential talks " in all the ad- 
mirably appointed " smoke-rooms " of the legislative assem- 
blies of modern Europe are concerned. You may be sure, for 
instance, if you see the heads of two or three labour members 
bowed together over the glasses in the " Members' smoking- 
room " of the British House of Commons, or still more, perhaps, 
in the company of a trade union official or two, downstairs in the 
" Strangers' smoking-room," that the conversation is on this 
topic. In one form or another the technique of social democracy, 
either in the political or in the industrial field, is being discussed. 
In essence, the question is always the same. How is the workers* 
strong and simple desire for an alleviation of their lot and this 
alone is the motive force which has hoisted the social democrats 
into place to be transformed, once the social democrats have 
" arrived," into a dull acceptance of the narrow limits which 
capitalism imposes on the worker ? For, even though the workers 
may be only slowly awakening to the necessity of revolutionary 
action, if they wish ever to actualize their dreams of socialism, 
yet they have always a sound and vigorous impulse towards 
struggle for immediate improvements, without waiting to 



802 THE COMING STRUGGLE FOR POWER 

consider one way or the other whether these improvements are 
compatible with the existence of capitalism. The subtle task of 
the social democratic office holder is to encourage this impulse : 
for this he must do, for he lives by it. Yet, at the same time, this 
gold of instinctive working-class revolt must be somehow trans- 
muted into the lead of working-class passivity and subservience. 
The social democrat is, in fact, a kind of inverted alchemist for 
ever labouring at this task. 

We must admit, however, that the technique which has been 
evolved for this delicate and difficult task is marvellously 
efficient. Thus, in the industrial field, a simple and effective 
procedure has been invented. For example, a course of events 
approximating more or less closely to the following procedure is 
noticeable in nearly all current wage disputes. Let us say that 
the employers in a given industry come to the conclusion that a 
certain reduction in wages say, 10%, is necessary. This decision 
may or may not be privately conveyed to the leading trade 
union officials. The employers then demand publicly a 80% 
reduction. The trade union officials indignantly reject the de- 
mand. A campaign of protest is organized. The employers seem 
inexorable. Lockout notices are posted. Conference after con- 
ference is called between " owners " and " men." Each breaks 
down before the firm refusal of the men's leaders to give way. 
At the eleventh hour, an outside arbitrator is consulted. 
Strangely enough, he proposes a 10% reduction. The employers, 
protesting that it is quite insufficient, accept it " as a patriotic 
gesture." The men's leaders, equally reluctantly, but " to 
avoid the suffering of a stoppage," also accept. Mass meetings 
are summoned in which the trade union officials " courageously " 
defend their acceptance of the terms, and point out that they have 
succeeded in avoiding at least two-thirds of the threatened 
reduction. So long as it is not repeated too often the whole 
well staged and exciting drama effectively serves its purpose. 

The corresponding device in the political sphere is, no doubt, 
the heaven-sent possibility of Minority Government. It is 
doubtful whether without this device a Social Democratic party 
could ever take office. As soon as it secured a majority, the blank 
contradiction between its programme and its performance, above 
ail between the whole strain and tenor of its propaganda and 



THE NATURE OF SOCIAL DEMOCRACY 808 

the actions it invariably finds itself performing when in office, 
would be too brutal. Even the simplest voter would be un- 
deceived. And the menace of obtaining a majority has hung 
oppressively over the heads of Social Democratic parties. The 
Germans and the French, indeed, have guarded against it 
almost perfectly by so arranging their electoral systems that it is 
almost impossible for any one party ever to obtain a clear 
majority over the others. 

The British Labour party is most exposed to this grave risk. 
And, indeed, in 1929 a clear majority was perilously near. (I re- 
collect the great anxiety which Mr. MacDonald showed just 
before election day. He kept reassuring himself by saying that he 
was sure the liberals would do well. He remarked several times 
that it would be much better not to have a majority than to be at 
the mercy of those labour supporters whom he described as 
" some of our easey-oozy asses.") However, the " majority 
danger," as in 1923, was averted. A triumphant minority was 
secured : the great alibi " we have never had a majority " 
still stood. Nor should the real strength of this alibi be under- 
estimated. For the worker has no easy means of judging the good 
faith of his leaders. To anyone who has had personal contact 
with labour leaders, the idea that if another thirty or forty 
labour members had been elected in 1929, thus securing a 
majority, the whole conduct of the Labour Government would 
have been transformed, is grotesque. It is laughable to suppose 
that in that event Mr. MacDonald would have sprung forward, 
a British Lenin, and begun the gigantic and hazardous task of 
destroying British capitalism and replacing it with a socialist 
economy. As a matter of fact, of course, the actions of the 1929 
Labour Government were determined, not in the least by the 
precise number of Labour supporters who sat in the House of 
Commons, but by the objective difficulties of British capitalism : 
by the economic crisis with which the Government was con- 
fronted, and which finally wrecked it in August, 1931. And this 
crisis would not have been charmed away by the presence of 
another forty trade union officials at Westminster. 

None of this, however, was visible to the average British 
worker who voted labour. All he knew of Mr. MacDonald, was 
that he was an imposing gentleman who came down to great 



804 THE COMING STRUGGLE FOR POWER 

Town Hall meetings and declared that he was in favour of 
socialism. " So that's all right," said the worker, " he shall have 
my vote." True, there were no signs at all of socialism when 
Mr. MacDonald, having got the votes, became Prime Minister. 
" But, then, he didn't have a majority. And he always said that 
you had got to have a majority before you could begin to bring 
in socialism. True, the local * Reds ' say that Mr. MacDonald 
never meant ' all that about socialism,' anyhow. But how can 
one tell that ? Anyhow, he never had a majority, had he ? " 

The force of this argument for the workers, who, in the nature 
of things, cannot know the real intentions of their leaders, cannot 
be overestimated. Communist propaganda has hurled itself for 
these ten years past upon the hitherto impregnable rock of that 
great excuse " Well, they never did have a majority, did 
they ? " If, therefore, the election of another forty trade union 
officials to Parliament would have made no difference at all to 
the economic situation with which the Labour Government had 
to deal, it would have transformed the political situation. It 
would have destroyed the great excuse. The masses, and what is 
still more important the rank and file of the organized Labour 
movement the N.C.O.s of the working class would really 
have expected a steady advance towards socialism and when 
they got " economy " instead, the labour movement would have 
been irretrievably damaged within a year. Thus, in the case of a 
politically advanced nation like Great Britain, it can perhaps be 
laid down as one of the conditions for the existence of a Social 
Democratic party that it should never obtain a Parliamentary 
majority. 

Now, the British Labour party has never obtained a majority. 
Another difficulty has, however, confronted it. It is conse- 
quential upon the first. With the aid of a good minority, the 
workers can often be induced to take liberal performance for 
socialist promise. But by the time that a Social Democratic 
party reaches office, the achievement of anything comparable to 
an ordinary liberal legislative record (a record comparable to 
that of the Asquith Government before the war, for example) is 
found to be utterly impossible. We have seen that social demo- 
cracy never arises till a comparatively late stage in the develop- 
ment of a national-capitalistic system. During the heyday and 



THE NATURE OF SOCIAL DEMOCRACY 808 

early afternoon of capitalism, the political stage is inevitably 
occupied by a Liberal party. During its later phases, such a 
liberalism does usually grant the main concessions possible under 
capitalism. Various social insurances health insurance, work- 
men's compensation, old age pensions, Trade Boards in sweated 
industries, and, most important of all, some system of unemploy- 
ment insurance, are established. Capitalism, while still com- 
paratively vigorous and resilient can carry these burdens with 
only verbal protests. At a certain stage in its development, how- 
ever, the inevitable ossification of capitalism will begin to dis- 
illusion the workers and so turn them from liberalism towards 
the establishment of an, at any rate ostensibly, socialist 
party. By the time that this new Social Democratic party 
has grown up and has won its way to office, the decadence 
of the capitalism in question will have gone a considerable 
distance. 

How inevitably unfortunate, therefore, will be the economic 
situation which will confront the social democratic ministers 
when they enter their Government offices. They will be pledged 
to introduce socialism. Not very many people, however, are 
really expecting very much of them in that direction. Well 
sheltered behind a comfortable Parliamentary minority, they 
feel pretty safe there. But what the workers really are expecting 
from them are some good substantial social reforms, pensions, 
insurances, housing subsidies, etc., etc. And no doubt some of 
the social democratic Ministers genuinely meant to give them 
such things. But what do they find is the real position ? All the 
really valuable, and easily practicable, concessions have already 
been granted by previous Liberal Governments. This, in itself, 
would not perhaps matter very much. Rates of benefit could all, 
at any rate, be increased. Far worse, however, is to follow. The 
social democrat Ministers soon discover that the economic basis 
which alone made possible these social services has been eaten 
away. There is no question at all, their well-informed permanent 
officials will conclusively prove to them, of extending and so 
increasing the cost, of these services. Already it is certain, they 
will demonstrate that the chronic unemployment, which is by 
this time an ageing capitalism's chief and intractable disease* 
is aggravated by the weight of taxation upon entrepreneurs 

Up 



306 THE COMING STRUGGLE FOR POWER 

which these insurances, etc., impose. To increase them, and 
consequently to increase taxation, would be, they teach a 
socialist Chancellor of the Exchequer to say, " the last straw 
for industry." On the contrary, the alarmed Ministers will 
realize, the real question with which inexorable economic fact 
confronts them, is by how much these social services must be 
cut down. And these iron economic facts, not their previous in- 
tentions, nor their possibly sincere benevolence, nor their realiza- 
tion of the urgency of cashing some part of that vast promissory 
note which they signed at the previous election, must of neces- 
sity control their actions once they are in office. This, then, is 
the second, and by far the graver of the difficulties which con- 
front a Social Democratic party. Pledged to introduce socialism, 
such a party actually intends to extend liberalism. Yet the very 
nature of the economic circumstances which alone have placed 
it in power, utterly forbid a programme of even liberal social 
reform. The decline of capitalism, which is itself the only be- 
getter of social democracy, is thus its grave-digger also. For it 
hoists the social democrats into office only to impose upon them 
the repulsive task of taking back from the workers those con- 
cessions which had been won under liberalism. The same dilemma 
always confronts the social democrats. The workers, having 
been promised socialism, would, no doubt, accept the tangible 
benefits of liberal social reform as a substitute. They might 
even, perhaps, be persuaded for a time, at any rate, to accept 
nothing at all. But how are they to be persuaded to accept, at 
the hands of their own leaders, the withdrawal of all that they 
have won by their previous efforts ? How can they be persuaded 
to tolerate, not only the non-fulfilment of every promise, but the 
loss of nearly every privilege which they have won from previous 
capitalist Governments ? Is this to be the reward for all their 
efforts in putting the social democrats into office ? Here, in- 
deed, is a situation that taxes to the full all the arts of social 
democratic oratory. And yet, unless they are willing to under- 
take just this task of " economy," the social democratic Minis- 
ters must quit the stage the very pleasant political stage. For 
an old capitalism cannot exist without " economy " (that is, 
the enforced economy of the workers). There is, of course, a 
third course of action an alternative either to doing capitalism's 



THE NATURE OF SOCIAL DEMOCRACY 807 

dirty work for it, or of quietly quitting the stage : and that is 
to join in the revolutionary struggle of the workers to overthrow 
capitalism and to begin to build socialism. That alternative 
however, has never been known to occur to a social democratic 
leader. 



t* n 

V- u< 



CHAPTER XVII 
Mr. MacDonald and the 1981 Crisis in Britain 

IT is now time to exemplify these general conclusions about the 
present character of Social Democratic parties. Great Britain 
has just had an opportunity of observing the practice as well as 
the theory of social democracy. For the economic crisis which 
confronted the capitalist world in general, and Great Britain in 
particular, in the late summer of 1931 found a Social Democratic 
Government in Whitehall. 

During the whole of the two years (June 1929 to August 
1981) during which the British social democrats were in office 
the two difficulties which we have distinguished in the last 
chapter confronted them. As we anticipated, they were able to 
guard against the first difficulty that of reconciling their 
supporters to the non-introduction of socialistic measures, by 
an appeal to their minority position. Within six months of their 
accession to office, however, the second difficulty, namely that 
of applying a programme of liberal social reform to a declining 
capitalism, became apparent. In the autumn of 1929, when the 
period of relative capitalist stabilization (1924-1929) was at its 
height, the Labour Cabinet was able to make a move towards 
the extension of that body of social legislation which Mr. 
Asquith's pre-war Government had created, and which succes- 
sive Liberal and Conservative Governments had ever since 
extended. The Labour Cabinet extended, quite materially, their 
conservative predecessor's widows' pensions scheme. But this 
was their final achievement ; for this was the very last sop which 
British capitalism was able to throw to the workers. 

By January 1980, the economic crisis was already deepening 
with every week. From that moment until the last panic- 
stricken meetings of the Labour Cabinet in August 1981, there 
was no further question of giving the workers anything. On the 
contrary, the question of how much had to be taken away from 
them began to be asked with ever-growing insistence. And when 
it was no longer possible to delay giving the answer for even 
another week, the Labour Government simply broke up. For a 
majority of its members took the view that while it was easy 



MR. MACDONALD AND THE 1981 CRISIS 809 

to give the workers social reforms instead of socialism ; while it 
was even possible to arrest the progress in social reform achieved 
by all previous capitalist Governments, and to give the workers 
nothing at all, yet it was not possible for a Labour Government 
to take back from the workers what the capitalists had already 
given them. 

A special circumstance makes the fall of the British Labour 
Government particularly apposite for the purposes of our en- 
quiry. For different social democratic leaders chose different 
alternatives. Mr. MacDonald, Mr. Snowden (as he then was) 
and Mr. Thomas preferred to remain upon the stage of action 
and to carry through the attack upon the workers. Mr. Hender- 
son and the rest of the Labour party preferred to leave the stage, 
handing over the Government of the country to the liberals 
and conservatives. We had the instructive spectacle of both the 
possible alternatives open to a strictly non-revolutionary Social 
Democratic party, in office in a period of capitalist decline (as 
it always must be), being taken simultaneously. Connoisseurs in 
political ignominy may estimate the relative merits of the two 
courses. 

We may content ourselves with observing certain of the 
characteristics which the leaders of British social democracy 
have exhibited, both in the 1931 crisis and in the earlier history 
of the Labour party. For there is nothing accidental about the 
way in which these men have behaved. Just as the strong hands 
of economic necessity have moulded the Labour party itself, 
so that party has gradually, by a process of political natural 
selection, produced the types necessary to play the parts that 
had to be played. To suppose that things could have been other- 
wise, " if only MacDonald had been firmer, if Snowden had read 
an economist later than Jevons, if Henderson had ever guessed 
that there were worlds undreamt of in annual conference resolu- 
tions," is vulgarly to misread history. If Mr. MacDonald, Mr. 
Snowden, Mr. Henderson and the other Ministers had been 
different in character, then they would not have come to the 
leadership of the British labour movement, and the men who 
would have played their parts would have borne other names. 
That is all. This very element of inevitability is, however, the 
one factor which lends interest to the characters and actions of 



810 THE COMING STRUGGLE FOR POWER 

these men. For as these were the men which the Labour party 
had to produce as its leaders, we can throw light on the char- 
acter of the party from the character of the men. 

Mr. MacDonald is certainly the most interesting of them. 
Originally he must have been a gifted man : even to-day Mr. 
MacDonald has, within certain strict limits, within, in fact, 
Parliamentary limits, qualities which make him a very valuable 
servant of British capitalism. It was submitted above that the 
main task of social democracy is to undertake a kind of per- 
nicious alchemy, whereby the gold of the workers' revolt against 
their conditions of life under capitalism is changed into the lead 
of a timid and unprofitable liberalism. It is appropriate, there- 
fore, that the first leader of British social democracy should 
have, both in his appearance, and in his utterances, more than 
a little of the alchemist or wizard about him. When Mr. 
MacDonald rises to his feet he does not so much speak as weave 
a spell. No doubt, some of his female biographers have already 
noted this. They may not, however, have defined the nature of 
the incantation. Yet of recent years, at any rate, there can be 
no doubt about it : the spell has had one undeniable purpose, 
and that is [to bemuse its hearers so that they shall have no 
idea whatever of the nature of the issues under discussion. And 
for that purpose the spell is unrivalled. Here, for example, is 
how Mr. MacDonald recently enchanted his miner constituents 
on the subject of the 1930 Coal Mines Act. He spoke at Seaham 
Harbour on January 8th, 1931 (The Times report). He is com- 
plaining that the coal owners are not working the Act in a proper 
manner. 

44 I say that if they continue in that attitude, they are 
setting an example which, if you should follow it when it 
suits you, knocks them completely out of court, if they object 
to that action in your power." 

There indeed is a clarion call to democracy ! Later on in the 
same speech, Mr. MacDonald makes a defence of the wRole 
44 gradualistic " position. He is still complaining of the owners' 
refusal to work the Coal Mines Act. 

44 Supposing it had been the miners ; supposing the Tory 



MR. MACDONALD AND THE 1981 CRISIS 811 

party had passed an Act, a reactionary class Bill, which you 
did not like and which you objected to, at any rate in some 
of its details." 

How perfectly characteristic is that last qualifying clause 
" at any rate in some of its details " ! The orator was becoming 
quite warm about a hypothetical " reactionary class Bill " : 
and then the caution of the statesman intervened. The miners, 
it seems, would only object since they were good social 
democrats to a " reactionary class Bill," " in some of its 
details." To do more would surely be unwise, impolitic, extreme, 
savouring of Moscow and direct action. Mr. MacDonald, more- 
over, goes on to tell the workers why they must always obey the 
laws. 

" I believe that if laws are passed they ought to be worked. 
I believe that when a law is passed, if it is bad and unjust, by 
its very working, it will kill itself, and by being killed in that 
way it contrives more to the side of enlightened intelligence 
from which future laws that are good will come." 

Here, then, is the key to progress discovered at last. Simply 
remain quiet. Do not fuss, do not fume, above all, do not agitate. 
If laws are good well then, what more do you ask ? If they are 
bad, then you have it on the Prime Minister's authority that 
they will " kill themselves " and so " contrive more to the side 
of enlightened intelligence from which future laws that are good 
will come." So really, you see, bad laws are even better than 
good, because they " contrive," phoenix-like from their ashes, 
still better ones. 

Mr. MacDonald goes on to contrast this correct attitude to 
the State and its laws with that other attitude of which the 
Durham miners may, he fears, have heard. 

" By that attitude to the State and to the authority of 
the State " (i.e. an attitude of passive obedience) " enlightened 
men and an enlightened community will gain far more pro- 
gress than by a fussy challenging of the law, which upsets 
the whole conception of ordered evolution and creates a con- 
dition of mind which will accept nothing and imagines that 



812 THE COMING STRUGGLE FOR POWER 

the will of a few individuals is of more importance than public 
opinion itself." 

Surely of all the innumerable indictments of the revolutionary 
case, which every social democratic leader is eternally making, 
this is the strangest ? We are very familiar with hearing Lenin's 
methods called " brutal," " barbaric," " infamous," " hellish," 
or even, worst crime of all, " un-British." But to hear them 
stigmatized as " fussy " that, indeed, was unexpected ! 

What are we to make of this extraordinary verbiage verbiage 
absolutely typical of Mr. MacDonald's speeches whenever he 
touches general conceptions at all? It would be a complete 
mistake to think that his incomprehensibility is accidental : 
to suppose that Mr. MacDonald cannot speak with normal 
clarity. The truth is that Mr. MacDonald has grasped, probably 
instinctively, that the real purpose of social democracy is 
obfuscation : that its essential act of political alchemy cannot 
be performed except behind the most opaque smoke-screen. 
Hence the function of its leader is to blur and confuse every- 
thing to the utmost possible extent. The real issues involved, 
the hard facts of every question, the actual play of interests, 
must be hidden in every possible way. Perhaps Mr. MacDonald 
himself could hardly tell you why he is so determined not to be 
understood. And yet the reason is obvious. When Mr. Mac- 
Donald tries to conceal everything behind his great fog of words, 
he is really trying to conceal one thing alone, and that one thing 
is the steadily growing and inescapable clash of class interest. 
That is the ruinous truth which must be hidden at all costs. 
For, if it is not hidden, will it not one day " upset the whole 
conception of ordered evolution " ? And one must not upset 
Mr. MacDonald's conceptions. 

And so the whole art of statesmanship is seen by Mr. Mac- 
Donald to consist, for the social democrat, in postponement, in 
evasion, and, above all, in obfuscation. One would not even 
like to say without qualification (for Mr. MacDonald's methods 
are infectious) that he has abandoned socialism. It is rather 
that he has emptied the concept of every* shred of meaning. It 
is quite possible that Mr. MacDonald still thinks that capitalism 
will slowly consolidate into great corporations, over which the 



MR. MACDONALD AND THE 1981 CRISIS 818 

authority of the State may slowly extend ; that the League of 
Nations will gradually assume beneficent regulative functions 
between such great national and international corporations ; 
that taxation will tend towards a perceptible levelling out of 
the very great fortunes, etc,, etc., etc. He probably has little 
time or inclination to think of the future of society at all ; but 
if he does occasionally give it a thought, he probably supposes 
that it will develop along some such lines as these. And this, 
no doubt, is precisely what Mr. Baldwin hopes for too : it is to 
make this possible that he trips and traps Lord Beaverbrook. 
All but the most blind of the capitalist leaders realise the 
necessity for development along these lines if capitalism is to 
survive. (And even the most far-sighted of them try to blind 
themselves to the fact that it is developing in a very different 
direction.) There is not the slightest difference of opinion here. 
The only dividing line in modern politics is between those who 
believe that capitalism can solve its problems and develop along 
these lines, and those who believe that its difficulties are insur- 
mountable without demanding of the workers the sacrifice of 
their liberties, their livelihoods, and, sooner or later, their lives 
in war. And, of course, Mr. MacDonald is ten miles on the 
capitalist side of this line. Indeed, the British social democrats 
in general show a quite touching faith in the infallibility of 
capitalism a faith not shared at all by the more shrewd and 
clear-sighted capitalists themselves. These younger capitalists 
are quite able to see the extreme difficulty of their position ; 
but they are determined to make one more attempt to save 
the system which has done so much for them. And they realise 
that they have at least one great asset : and that is the 
childlike and untroubled faith in capitalism of the British 
socialists. 

During the period of office of the Labour Government, Mr. 
MacDonald and his friends had almost daily to do things which 
violated the most elementary of those socialist principles which 
they had spent their lives in advocating. Naturally the sub- 
jective effect on their own personalities was not beneficial. No 
great damage to the " psyche " was done in the case of a really 
crude type such as Mr. Thomas. Mr. Thomas has probably never 
been insincere in his life for how can one be insincere when one 



814 THE COMING STRUGGLE FOR POWER 

has absolutely no beliefs of any kind ? But on a considerably 
more developed organism such as Mr. MacDonald, the constant 
violation of every principle must have and, indeed, obviously 
has had a gradually disintegrating effect. It is true that Mr. 
MacDonald's socialism was never of a very powerful or, as one 
would expect, of a very clearly defined type. A perusal of one 
of his chief theoretical works, Socialism, Critical and Construc- 
tive, will show that. 1 Still there is no particular reason to sup- 
pose that Mr. MacDonald did not quite sincerely believe in the 
pleasant and, unfortunately, quite fallacious set of maxims 
which constituted his political philosophy. At any rate, they 
were all he had, and until the cold touch of reality shattered 
them for ever, they served him very well for the purposes of the 
platform. 

Now, however, that he has had to abandon them all, since 
he violates every one of them every day, he is left utterly naked 
of any principle, of any sense of values at all. The social democrat 
who has found that real life compels him to do the exact opposite 
of all he has ever thought or said, is in much the same position 
as the Christian who has lost his faith. Neither has any touch- 
stone left with which to try whether one thing is better or worse 
than another ; neither has any sense of purpose or direction by 
which to guide his actions. Both become completely opportunist, 
in the fullest sense of the word, carrying on from day to day 
along the line of least resistance, mere corks bobbing on the 
stormy seas of politics, responsive to every wave and current. 
The ordinary capitalist politician often has some more or less 
vague set of general principles to guide him, principles which 
in practice all boil down to maxims for the better preservation 
of the system of society which has done him so well, but which 
are well disguised by religious or patriotic formulae. He is scarcely 
ever quite so psychologically naked as is the evolutionary 
socialist who has allowed himself to be stripped by the ruthless 
fingers of reality. It is this terrible lack of any vestige of social 
purpose this lack of any sense of direction at all which has 
at length produced in Mr. MacDonald those ultimate and least 
estimable signs of decay. 

1 Mr. MacDonald tells us that British socialism derives from Godwin rather 
than from Marx. So far as his own views are concerned he is no doubt quite right. 



MR. MACDONALD AND THE 1981 CRISIS 815 

The pathos of his surrender to London Society : his meander- 
ing reminiscences of visits to " the great," his feeble little 
attempts to play the role of " the gentleman connoisseur " : 
his visits to Christies, his Jacobean bedsteads : his interminable 
little gossipings over the tea-cups with the hostesses, whom 
he considers to be the great ladies whom he had so often dreamt 
of in the days of his poverty : all this makes but a gloomy, 
trivial, and, above all, philistine end to the career of a once 
gifted man. 

And naturally, if insensibly, Mr. MacDonald's opinions have 
accommodated themselves to his life. The " dole " and all the 
other Mies noires of the drawing-room have become his b&tes 
noires also. After all, as he himself has discovered that his 
socialism is but a dream, is it not natural for him to deplore 
what in truth are the chief burdens upon capitalism ? As for 
his political life well, " the King's Government must be 
carried on " and who is so unquestionably cast for the role of 
first Minister as this leonine, white-haired, superbly handsome 
man ? How clearly every Imoment of his Downing Street days 
does Mr. MacDonald see himself as Prime Minister. He never 
misses a moment of his own performance : " He sits attentive 
to his own applause." Sometimes, perhaps, he is inclined to 
doubt if the whole nation is equally attentive. At such moments 
the anxious look of an actor, when he asks you whether you 
have seen his new play, crosses Mr. MacDonald's face. Mr. Mac- 
Donald has become, since, having no social purpose left, he had 
nothing better to do, an actor and that type of actor which the 
cruel French call a " m'as tu vu ? " " Have you seen me as the 
Prime Minister? My greatest role, I assure you," Mr. Mac- 
Donald is anxiously asking the nation. Yes, we have seen 
him. 1 

And very likely we shall see a great deal more of him. For 
Mr. MacDonald has got into the habit of saving the country* 
He has saved it from the Labour party's extravagance. If 

1 Leading actors and actresses when they appear under the management of 
one theatrical entrepreneur, while under contract with another, often have 
printed after their names on the programme : " Presented by C. B. Cochran by 
arrangement with Basil Dean " or whoever they have contracts with. It would 
express some of the realities of the situation if there appeared after Mr. Mac- 
Donald's name on the order paper of the House of Commons, " Presented by 
Stanley Baldwin, by arrangement with the Labour party." 



816 THE COMING STRUGGLE FOR POWER 

Mr. Baldwin fails in the end to restrain the advocates of action, 
Mr* MacDonald will very likely feel constrained to save it again. 
He may yet emerge as the leader of a " great centre party, sane 
yet progressive, including all that is best in the traditions of 
liberalism and labour, appealing to all sections of the com- 
munity, to rich and to poor alike : to the duke in his palace 
and to the crofter in his cot, seeking once more to build a new 
Jerusalem in England's green and pleasant land " why, his 
future speeches simply write themselves I 

The crisis of August 1931, which so exposed British social 
democracy, did Mr. MacDonald a very great service. It relieved 
him, for example, of the necessity of making statements so 
preposterously at variance with all his opinions, as this one* 
which he made in the Scottish journal Forward no longer ago 
than October 8th, 1930. " . . . the capitalist system has crashed 
in England, Europe and America. This system has crashed 
because it was inevitable. There is only one means of saving 
humanity and that is socialism." TJie crisis has made him in 
fact, as well as in fancy, an ordinary capitalist politician. At 
long last he has been freed from what must have become, at any 
rate an arduous, if not a distasteful, life of pretence. He is now 
able to stop pretending to be anything but a sensible-minded, 
moderate conservative. His speeches and writings have im- 
proved : they have become quite comprehensible. He now 
tells us what he really thinks. And we discover that he thinks 
exactly what the average occupant of, say, a first-class carriage 
in a suburban train, travelling up to business, thinks too. 

The crisis did the same service to Mr. Thomas and Mr. Snow- 
den. It was evident from their speeches that all three of them 
had shaken off a very considerable burden. After all few men 
few politicians even enjoy perpetual dissimulation for its own 
sake. Besides, there was a very considerable felicity in sitting 
in a Cabinet composed of such undeniably genuine English 
gentlemen and conservatives as Mr. Baldwin, Sir Samuel Hoare, 
or Sir Philip Cunliffe-Lister. Surely, however, Mr. Baldwin was 
a little cruel in telling the House of Commons, on the very first 
day that the new National Government appeared in public, that 
the situation reminded him of an old illustration from Punch, 
drawn by the famous artist Leach. Leach drew a picture of 



MR, MACDONALD AND THE 1981 CRISIS 817 

fox-hunting in which the little hairdresser rides up to the duke 
at the meet and says, " What I like about 'unting, your grace, 
is that it brings together people who might never 'ave met hin 
any other way." It was not, however, any of the promoted 
social democrats, but Sir Herbert Samuel who noticed the 
remark and, looking a little sharply at Mr. Baldwin, his neigh- 
bour on the Treasury bench, told the House that in the interests 
of the nation he was quite willing to play hairdresser to Mr. 
Baldwin's duke. 

To the other social democratic leaders, Mr. Henderson, Mr. 
Clynes, the late Mr. William Graham, and the rest, the August 
1931 crisis was in one sense less kind. Far from being able to 
drop their burden of conscious, or unconscious, dissimulation, 
they had to redouble their efforts. Having consented to nine- 
tenths of the attacks on the workers effected by the National 
Government, they had to appear as stern and unbending class- 
warriors over the remaining tenth. Having for two years taken 
not a single step towards introducing socialism, and having 
done for that matter very little towards salvaging capitalism, 
they now had to step forth as wizards of finance who could 
have solved the crisis (had they not inadvertently resigned) 
in a twinkling, without the slightest sacrifice, or, indeed, 
inconvenience, to anyone, whether worker or capitalist. All 
these tasks, however, were very cheerfully undertaken by the 
social democratic leaders. Indeed, they found them not in the 
least embarrassing. For they were conscious of being once more 
in the classic social democratic position. They were verbally 
opposing the unpalatable necessities of capitalism, without 
having to suggest any alternative of their own. Indeed, they 
never felt more optimistic : there was only one cloud in the sky 
and that was one which they were used to : there was the 
menace of a majority. It was possible that they might win the 
ensuing election and then ! However, that was only a possi- 
bility, so why worry about it ? (As it turned out, there was not 
the slightest reason to worry about it.) Sufficient unto the mo- 
ment was the fact that they were once more free from the horror 
of actually facing the real economic facts of 1981, free to talk, 
to bluster, to deceive to lead the workers to another Labour 
Government and to another resignation. 



818 THE COMING STRUGGLE FOR POWER 

Besides, as the late Mr. Graham, with commendable frankness, 
pointed out in the Daily Herald, the workers were free to forget 
their leaders' record during the two years of office. Above all, 
they were themselves free to forget both the Labour Govern- 
ment and the crisis which had ended it : free to ignore every 
lesson to be learnt from the farce of their office and the ignominy 
of their fall : free to go back exactly as if nothing had happened, 
to the repetition of the old herd-cries, to the old pretences, and 
the old deceptions. They were determined to show that they 
had learnt absolutely nothing from what had happened to them. 
(Mr. Clynes, for example, was at pains to point out that he 
would not oppose the National Government from " a narrow 
manual worker's point of view.") For the only lesson which they 
could have learnt was the lesson that social democratic gradual- 
ism was bankrupt. And where would they have been then ? 

The most gifted of their younger supporters did, it is true, 
achieve a brilliant analysis of the situation. He showed that, 
whether the crisis was regarded as a " bankers' plot " or as a 
genuine crisis in capitalism, in either case it entirely destroyed 
the philosophy of gradualism upon which the Labour Party was 
based. His argument cannot be better put, and deserves quota- 
tion. Writing immediately after the August 1931 crisis, he said : 

" In the first place, of course, it is necessary to agree upon 
what has occurred. The view appears to be held that the Labour 
Government was destroyed by a c Bankers' Ramp.' In the 
language of a member of the late Administration, ' The 1924* 
Labour Government was destroyed by a Red Letter ; the last 
was ended by a Bankers' Order.' It is an astonishing charge to 
find in the mouths of those committed to gradualism. If a weak 
and comparatively innocuous Minority Government can be 
broken by a conspiracy of finance capitalists, what hope is there 
for a Majority Government, which really threatens the bankers' 
privileges ? If capitalism is in such a state of organized self- 
consciousness that it can conspire against a Government and 
bring it down by moving its international financial forces 
against it, what hope is there for a gradual and peaceful ex- 
propriation of the bankers ? 

" But, it may be urged, they would then have to deal with 



MR MACDONALD AND THE 1981 CRISIS 819 

a strong Government backed by a majority in the House of 
Commons, which would be a different proposition. What would 
the * strong ' Government do, committed, as it would be, to 
peacefulness and gradualism? Let us remember that the con- 
spiracy takes the form of an acute economic crisis induced by 
certain financial steps, taken in the ordinary course of business, 
by persons, most of them beyond the reach and control of the 
Government. In addition, it must be remembered that the new 
crisis would be superimposed upon an already existing one, for it 
is reasonably certain that there will never be another Labour 
Government in England except in conditions of economic crisis 
and consequent mass unrest. The ascension of the Labour 
Government, charged with menace to the whole capitalist in- 
terest, will augment this condition, and the Minority Govern- 
ment will find itself faced with another ' National Emergency.' 

" What will it do ? Drop its gradualism and tackle the emer- 
gency on socialist lines ? Or drop its socialism in the hope of 
reassuring private enterprise in order to get a breathing-space ? 
It will find itself hesitating between these two opposite courses. 
On the one hand, the state of the country will demand prompt, 
vigorous, and revolutionary measures. On the other hand, it 
will bring to the emergency a mandate for conventional Parlia- 
mentary legislation, a working class fed on pap, and a Parlia- 
mentary party totally unprepared either theoretically or prac- 
tically to deal with the crisis. A Majority Labour Government in 
such a situation would do nothing effective, but would pause 
irresolutely between the two alternatives, until either fascist 
power would accomplish a coup d'etat or a new National Gov- 
ernment would be formed on the ruins of the old, something on 
the lines of what we have just seen. 

" Therefore, it would seem that, even if one takes the view 
that the end of the Labour Government was not necessitated by 
the needs of private enterprise, but was destroyed by finance 
seeking to profit itself, the policy of the party needs to be dras- 
tically overhauled. 

" Having stated its charge against the banking interest, the 
Labour party goes on to say that the crisis could have been met 
without resorting to the measures which resulted in the end of 
the Labour Government. They assert that the Budget should be 



820 THE COMING STRUGGLE FOR POWER 

balanced, but that this could be done without attacking wage 
standards, or the social services. And yet at the same time, they 
claim, they could still have stopped the run on sterling. 

44 In short, they hold that capitalism could have saved itself 
without attacking the workers. This involves the assumption 
that capitalism can be carried on more efficiently by socialists 
than by capitalists : that the sacrifices demanded of the workers 
are the result, not of the needs of private enterprise, but of 
its stupidity. This, of course, is quite consistent with gradual- 
ism, which requires that private enterprise shall continue reason- 
ably successful whilst it is being slowly and painlessly eliminated. 

44 The difficulty about accepting this pleasant and conveni- 
ent view is that there does not appear to be the slightest evi- 
dence to justify it. Apart from the growing mechanistic friction 
of private enterprise, there are profound psychological reasons 
why the Labour party will never be allowed to rationalize 
capitalism. It must never be forgotten that the mainspring of 
capitalist production is the individual investor. Whatever tends 
to make him nervous and apprehensive of the fate of a possible 
investment causes him to hold tight to that liquid capital, the 
release of which is essential to the maintenance and expansion of 
fixed capital. We may rail against him, but whilst we allow him 
to be the prime motivator of the productive process the sensi- 
tiveness of his psychology is always a factor to be reckoned 
with. It is just this psychology that a Labour party, climbing to 
power in circumstances of economic difficulty, not only cannot 
reassure, but must of necessity offend. In opposition, the Labour 
party is compelled, by the nature of the class struggle, to take 
up an alignment which hamstrings it when in office. A party 
climbing to power by articulating the demands of the dispos- 
sessed must always wear a predatory visage to the property- 
owning class. Thus in a society involved in the throes of an ever 
more heavily waged class struggle, the Labour party must wear 
the face of the implacable revolutionary, although all the time 
its heart is tender with the promise of peaceful gradualism. It 
knows that the limited vision of the workers will behold only its 
outward appearance, but it hopes that the gods of private enter- 
prise will look upon its heart. 

44 In either case one must be deceived. To satisfy the workers, 



MR. MACDONALD AND THE 1981 CRISIS 821 

the Labour party must fulfil the threat of its face, and so des- 
troy the political conditions necessary to economic gradualism. 
To calm the fears of private enterprise, it must betray its 
promise to the workers, and so lose their support. Once again the 
only result will be political vacillation and economic catastrophe. 
There will be another crisis in the party. Some of its leaders will 
take the heroic course, and in obedience to the call of a lofty 
patriotism will rally to the help of the nation. More in sorrow 
than in anger with this democracy, which cannot await the 
far-off interest of tears, they will cut themselves off from the 
sumptuous ease and lotus-eating of the workers and condemn 
themselves to the deserts of London society, and the company 
of Spartan, ascetic bankers. 

" Others of the leaders, thus made powerless, will cry with a 
loud voice, inviting all men to behold them, to bear witness to 
their self-abnegation in refusing office and their heroism in 
coming to the help of the workers in this time of need. The poli- 
tical arena will be thick with heroes. The poor, bewildered 
worker will be asked to regard as heroes those leaders who have 
left him and those who remain. Both, he will be told, obeyed 
some lofty and austere sense of duty, far beyond the limited 
region of class loyalties. The position was put with commend- 
able, if unconscious, clarity by a member of the recent Labour 
Government. ' In refusing to join the National Government,' he 
said, * Mr. Henderson had saved the soul of the Labour party, 
and Mr. MacDonald, in forming the National Government, had 
saved the nation.' 

" Thus is the fundamental and fatal contradiction of the 
Labour party exemplified in the mouth of one of its most illus- 
trious leaders." 

Unfortunately, however, the writer of this analysis had to 
present it, since he remained one of their supporters, in the 
form of an appeal for reformation to his old leaders. It fell on 
deaf ears. How could it have been otherwise ? To have accepted 
it would have meant a complete retreat from the position which 
they had held for their whole political lives. And social demo- 
cratic leaders never make retreats of this sort. For it is an inter- 
esting fact that your MacDonalds, Snowdens, and Hendersons 

WP 



B22 THE COMING STRUGGLE FOR POWER 

wear two very different faces, the one presented towards the 
capitalists, the other towards the workers. Their whole bearing, 
their attitude of mind, and, above all, their actions when they 
are dealing with the capitalists are most pliable : nothing could 
be softer, more mobile, more accommodating. But when they 
come to deal with the workers it is a very different story. Mr. 
Henderson has shown genuine determination and vigour in 
expelling and excluding all revolutionary elements from the 
Labour party. Mr. Clynes, Mr. Bevin, and the other trade union 
leaders have been implacable in purging their organizations of 
members who might give them trouble. Nor could (or did) the 
most rigorous advocate of economy complain that the burdens 
which Mr. Snowden placed upon the workers and the unem- 
ployed, both in direct " cuts " and in taxation were inadequate. 
On the contrary, his measures brought the whole Tory party 
to its feet cheering in the House of Commons, and won the 
unanimous praise of the Press. (As the political correspondent of 
the Evening Standard admiringly put it. " It required courage 
to tax the beer, the tobacco, and the entertainments of the poor. 
But the Chancellor never faltered.") Nor will any of the leaders 
of the Labour party, on whichever side of the House they may 
find it convenient to sit, ever falter before the expostulations of 
their supporters, however cogent, so long as they know that in 
the end the expostulator will remain a supporter. " The war and 
fortune's sons," they will " march indefatigably on," so long 
as life is in them, to ever new defeats, surrenders, deceptions 
and betrayals. 



CHAPTER XVIII 
The Future of Social Democracy 

THE preceding chapters may be thought to have taken a some- 
what unfavourable view of social democracy. It must be ad- 
mitted, however, that if the criterion of judgement be the carry- 
ing on of a society upon the capitalist basis, then there is a 
great deal to be said in favour of social democracy. 

It was suggested in Chapter XIII, that the workers inevit- 
ably appear, at a certaiiy stage in capitalist development, as an 
independent force upon the political scene. They do so in order 
to fulfil two purposes. First they wish to satisfy in fantasy their 
dream of something better than capitalism : to burn, but only 
iir effigy, those class enemies who prevent their dream from 
coming true. This is the psychological basis of social democracy. 
Secondly, and this is a far more important consideration, the 
workers quite realistically desire, not to end capitalism, but to 
modify it ; to pad it in the hope that it can be made more toler- 
able to live with ; to establish breakwaters and dams against 
the flood tides of uncontrollable private profit-making, to set 
downward limits to wages, upward limits to hours, to establish 
insurances against accident, ill health, unemployment, and old 
age. And this is the practical trade union basis of social 
democracy. 

Now let no one be so foolish as to deny that so long as capi- 
talism continues, such trade union politics are of great import- 
ance. The capitalist leaders are often very ignorant of the 
workers' needs, and stupidly unwilling to make even those con- 
cessions which can perfectly well be afforded. Indeed, in the 
heyday of capitalism, and up to a certain strict limit, such 
concessions, no doubt actually do, as the advanced liberals 
allege, benefit capitalism. For it does not really pay the capitalists, 
while they are still genuinely prosperous, to pay, house, and 
work their employees as disgustingly as they usually do, if they 
are not subjected to strong trade union pressure. 

Hence, the concessions that will be won by such trade union 
politics, suitably ornamented with social democratic trimmings, 
will be real and substantial enough to occupy the gradually 



824 THE COMING STRUGGLE FOR POWER 

awakening political consciousness of the workers for some years. 
The rise of social democracy does draw the workers into politics. 
By erecting the umbrella of the social services over their heads, 
it does do something for them. This, however, is a strictly con- 
servative function. By making capitalism comparatively tolerable 
for the workers, by occupying their energies in so doing, social 
democracy and " reformist " trade unionism can sometimes pre- 
vent a head-on class conflict for several decades. Are we to regard 
this as to the credit or debit of the social democratic account ? 
We must do neither : we must rather recognize that in the deter- 
minism of history it was inevitable that such parties should arise 

[ and flourish in the countries of the comparatively successful 
and flexible capitalisms of Western Europe. For in Western 
Europe very considerable sections of the population did un- 
doubtedly obtain some of the crumbs of capitalist civilization. 
The whole lower middle class, and, in the richest countries such 
as Great Britain, a definite category of skilled workers " the 
Labour aristocracy " arose, the members of which were quite 
unwilling to admit that capitalism was something alien to them, 

^ from which they received nothing. The limits which capitalism, 
even in its heyday, set to their lives were indeed narrow enough. 
Men, however, are as yet content with very little. 

For these classes, social democracy and trade unionism did, 
no doubt, obtain something. That something was very small 
compared to what contemporary technique could have given 
them in a socialist society. But to them it seemed much, for 
they compared it with the frightful destitution and insecurity 
which they had known before. Moreover, their trade unions 
and their " Labour " parties gave them, besides these material 
advantages, the feeling that they possessed some voice and 
weight in the national life. Western European civilization, even 
in its best decades, was certainly no fairy godmother to the 
workers. Yet they did not feel wholly excluded from the national 
life in the way in which, for example, the Russian workers and 
peasants were excluded from everything desirable in Russia. 
And that they were not so excluded was very largely the work 
of social democracy* It would be vulgar to attempt to evaluate 
this work as either good or bad ; it was a work which, owing to 
the automatic development of capitalism, it was inevitable that 



fHE FUTURE OF SOCIAL DEMOCRACY 825 

a body of men and women should arise to undertake. But it is 
a work which has no relevance to the present situation of the 
working class. 

It is easy, in retrospect, to see what were the limits of this 
function of social democracy. We said that social democratic 
and trade union politics held an umbrella over the heads of the 
workers, both by setting limits to their wages and hours, and by 
obtaining social insurances for them. But it was a watertight 
umbrella only for so long as two conditions were fulfilled : for 
so long as capitalism was prosperous ; and for so long as the 
social democrats did not get too much, did not succeed in raising 
wages very much, in greatly shortening hours, or in obtaining 
very extensive social services. For the instant that capitalism 
ceased to be prosperous, the instant that the economic burdens 
on it of minimum wages, maximum hours, and expensive social 
services, passed a certain point, an enormous rent appeared 
in the umbrella. And that rent was unemployment. 

In other words, it became clear that capitalism sets a very 
strict limit above which it is economically impossible to raise 
the workers' standard of life. If wages and social services are 
pushed up beyond this limit, chronic unemployment is created 
and the workers as a whole secure no gain. A moment's con- 
sidepotion shows why this must be so. The first effect is, of course, 
to increase costs of production in the particular country in which 
social democratic pressure is at a maximum. Thus, the competi- 
tive power of the industry of such a country in the world 
market is diminished, new capital investment is discouraged at 
home, and encouraged abroad. Consequently in the country 
affected savings exceed home investment and unemployment 
results, for the reasons which we analysed in some detail in 
Chapter VI. Moreover, even if we neglect such disequilibria as 
between state and state, the attempt indefinitely to raise work- 
ing-class standards within capitalism must fail. For the social 
democrats do nothing to remedy the chaos and anarchy of 
economic life under capitalism. They take no steps to replace 
the will of the private investor and entrepreneur, to continue 
old enterprises and to start new ones. Yet this " will to invest " 
is the motive force which alone makes the wheels of capitalism 
to turn. The burden of the concessions to the workers, and the 



826 THE COMING STRUGGLE FOR POWER 

fear of further burdens, sensibly decreases that expectation of 
profit which alone under capitalism makes the entrepreneur 
entreprendre. Thus, other things being equal, each social 
democratic advance in social services is bound to slow down 
the revolutions of the whole capitalist machine, by weaken- 
ing the force of its mainspring : since that mainspring is 
nothing else than the expectation of profit in the mind of the 
investor. 1 

The specifically socialist side of a social democrat's creed 
always remains, as we have seen, purely verbal. For the reduc- 
tion of the existing economic anarchy to method and order, and 
the replacement of the private expectation of profit, by a social 
will to produce, expressed by a Government which itself estab- 
lishes agencies of production and distribution, all involve the 
overthrow of the ruling class. They involve also some form of 
working-class dictatorship during the years of transition. And 
these things are not dreamt of in a social democratic philosophy. 
Since they will not face these hard implications of struggle, the 
social democrats can take no steps in the direction of the 
organization of social production. They merely oppose (though 
not very vigorously) the chaos of capitalism with demands for 
concessions for the working class. In the case of a national 
capitalism, with as vast an accumulation of fat to live on as has 
the British, they may have quite a long innings during which 
real concessions are won. But by just so much as their pressure 
on capitalism grows, the whole economic machine will begin 
to run more and more slowly. 

As we saw in Chapter VII, the interferences of trade unionism 
and of the social services (above all, of unemployment insur- 
ance) with the freedom of the labour market, now make it 
impossible for capitalism to recover from its periodic crises. 
An extraordinary position of Class Stalemate may be sometimes 
reached. On the one hand social democratic propaganda has 

1 It would be interesting if an estimate could be made of the absolute minimum 
rate of average profit independent of the factor of competition between the 
industries of different states which would suffice to maintain accumulation and 
so the output of fixed capital goods. For it is surely the case that if the average 
rates of profit and interest (which depend, of course, in the last resort on the 
rate of exploitation) sank below a certain minimum, a process of disaocumulation 
would set in. Property-owners instead of exchanging lump-sums for claims to 
annual payments would exchange claims for annual payments for lump-sums. 



THE FUTURE OF SOCIAL DEMOCRACY 327 

taught the workers to demand concessions from the capitalists : 
on the other hand, social democratic practice demonstrates to 
them that they must never attempt to overthrow the capitalists* 
The result is the condition of stalemate which, for example, 
tended to immobilize British political and economic life from 
1921 to 1981. In such a period the actual physical consequences 
of the even balance of class forces can be seen. In such places 
as the Lancashire cotton towns, capitalism had been just about 
brought to a dead stop : in some towns every single mill was 
shut. They stood like grim, tremendous, and inexplicable monu- 
ments of some other age. At the same time, no effort at all had 
been made to overthrow capitalism and begin any other system 
of production. 

Meanwhile, the very factors which were largely responsible 
for the paralysis of capitalist production were maintaining the 
workers sufficiently well to take any desperation out of their 
politics. But such a situation can never last. It is always, in fact, 
ended in the same way : the social democrats are hurriedly 
bundled out of office and the capitalists take up again the initia- 
tive of government. They begin the task of throwing back on to 
the workers the burdens which are causing the paralysis of 
capitalism. 

As then capitalist decline becomes pronounced, retirement to 
opposition becomes more and more the lot of the social demo- 
crats. The capitalist cannot well afford to delegate to any sub- 
ordinates, however reliable, the tasks of government during a 
crisis ; moreover, the tasks which must now be performed by 
Ministers become so flagrantly anti-working-class in character 
that the social democrats would risk the loss of their influence if 
they stayed to perform them. And so the future of social democ- 
racy will probably lie in opposition rather than in office. But 
this is by no means to say that its day is done. On the contrary, 
social democracy has a role to play in the acute stages of capital- 
ist crisis which lie ahead, more important if possible than any 
which it has played hitherto. 

It is true that its new role will be in essence the same as 
the old one : the role of the saviour of capitalism. But as the 
need for a saviour increases, so does his importance. Hitherto, 
we have considered only the present and the immediate past of 



838 THE COMING STRUGGLE FOR POWER 

social democracy. The social democratic parties of Europe are, 
however, at least thirty years old. In the chief countries of 
Europe they were already of great importance by the outbreak of 
the war. Their actions after the war have been so remarkable 
that we tend to forget how great a part they played in the war 
itself. Yet it is certainly not too much to say that the war 
could not have been fought without them. Now all the major 
parties of the Second International, except the British Labour 
party, were avowedly Marxian parties accepting, indeed reiterat- 
ing in innumerable resolutions, the whole of the Marxian view of 
society. They were the creation of the working class of Europe : 
to them were confided the hopes and aspirations of many mil- 
lions of Europeans : their leaders were trusted by the workers 
always to tell them where their true interests lay. In 1914, these 
parties supported the declarations of war of their respective 
Governments with the greatest possible vigour. The remarkable 
fact that in the early years of the war the workers created prac- 
tically no trouble to their rulers is well accounted for, since the 
workers' leaders themselves had joined the rulers' Governments. 
The pacifists of yesterday had had the honour to become the 
members of inner war Cabinets : the fiery orators of pre-war 
labour insurgence now used all their talents to induce their 
countrymen to believe that if only they would fight and die for 
their respective masters, a new era of peace, prosperity, democ- 
racy and equality would dawn, after their respective masters' 
victories. Nor could any other influence have been as effective as 
theirs in justifying the war to the workers of all the combatant 
nations. For were not these the men who had themselves taught 
the workers that war was the supreme evil of capitalism ; that 
the inevitability of war under capitalism was the ultimate justi- 
fication of its overthrow ? And yet, now that capitalist war had 
duly arrived, these very men were preaching that it must be 
accepted enthusiastically ; that so much as to annoy the capital- 
ists far worse to dream of attempting their overthrow was 
now criminal. Thus, instructed by their own leaders, how could 
the workers but suppose that this was some special kind of war 
to which all previous teaching did not apply ? 

Nor can we doubt that it was the apostasy of almost every 
social democratic leader alone which prevented the workers from 



THE FUTURE OF SOCIAL DEMOCRACY 829 

turning against the ruling classes under the hideous and ever- 
growing strain to which they were subjected in the later stages 
of the war. For after all, even alone, leaderless, abandoned as 
they were, the workers of half the states of Europe were in open 
rebellion by the end of the war. In the opening stages of the 
war, however, the majority of the workers had undoubtedly been 
swept away by the terrific propaganda of the ruling class. Thus 
to have remained socialists in 1914, would have meant for the 
social democratic leaders facing a period of unpopularity. To 
have preached against the war in 1914-1915 would have meant 
persecution. And that was not to be thought of. 1 Thus, in the 
event, it was the workers' own leaders who taught them to 
fight and die for their masters. This was the first time that 
social democracy saved capitalism. 

The second occasion was even more critical. As we have said, 
even as it was, the workers had become exceedingly revolu- 
tionary by the end of the war. And, in the state of extreme 
demoralization and disorder in which capitalism found itself 
during the first years of the peace, it seemed certain that in more 
countries than one a successful revolution would take place. 
But here again social democracy came to the rescue. The social 
democrats leapt from their seats in Government offices and 
successfully assumed the leadership of the working-class revolt. 
After that, of course, there could be only one result to the 
struggle. And yet it is evidence of the strength of working-class 
pressure at that time, and of the weakness of capitalism, that 
even when the forces of the workers were led by men whose whole 
object, for which they worked night and day, was to bring the 
revolt to nothing that, even so, capitalism had to use in many 
places very violent and even desperate measures to preserve 
itself. 

Capitalism to-day, however, needs constant support, and the 
social democrat may not weary in well doing. No sooner had the 
fierce onset of the workers in the immediate post-war years been 

1 There were of course instances of individual social democratic leaders who 
opposed the war. The present Lord Snowden, it is curious to remember, did so. 
So did Mr. MacDonald, but much less vigorously. These pacifist individuals within 
social democracy opposed the war from a liberal position, however. They opposed 
the war because they thought that it might be the ruin of capitalism : the war 
they felt must at all costs be stopped lest it bring revolution. 



880 THE COMING STRUGGLE FOR POWER 

overcome, than it became necessary to direct the still formidable 
forces of working-class revolt into harmless channels. This 
object also the social democrats accomplished in the period from 
1922 to 1929, by occupying the workers with the task of securing 
a Parliamentary majority and electing a social democratic 
Government, whilst praying, and so far as possible arranging, 
that they should achieve the latter and fall short of the former. 
This phase of social democratic activity, which is just con- 
cluding, we have already considered in some detail. But capital- 
ism is once again in need of a saviour. Once again its difficulties 
are so considerable that at first sight it seems inevitable that the 
workers' power should destroy it. It is not, of course, that the 
workers may be expected in the immediate future, or at any 
time, to rise in conscious revolt. Nor is any such action neces- 
sary for the destruction of the existing order of society. The 
problems of capitalism are such that what is necessary to its 
salvation is not that the workers should refrain from spon- 
taneous revolution ; what is necessary is that the workers should 
submit, and should submit without considerable resistance, to 
immense deprivations ; that they should submit to vastly in- 
creased insecurity, poverty, and misery ; and that sooner or 
later they should be willing to give their lives to capitalism in 
war. 

And the workers will not suffer all these things again, at any 
rate without considerable persuasion. Fortunately for capital- 
ism, the most powerful of all its advocates, the workers' own 
leaders, are once more available. And it is clear that this is to be 
the chief future function of the social democrats. In the in- 
dustrial field it will be necessary to secure reductions in wages 
without causing dislocating strikes. In every contemporary in- 
stance the efforts of the trade union officials are being devoted 
to the difficult task of inducing the workers tamely to accept 
unheard-of cuts. For these officials are as keenly alive to 
capitalism's necessity for sweeping wage reductions, as they seem 
blind and deaf to the workers' necessity to resist these reduc- 
tions, if they are to find food, clothing and shelter for 
themselves and their families. Politically, it will be necessary 
to induce the workers to occupy themselves with the 
harmless pastime of trying to elect a new Social Democratic 



THE FUTURE OP SOCIAL DEMOCRACY 881 

Government : or, if this seems an ideal equally difficult of attain- 
ment and uninspiring when attained, then at any rate to prevent 
by their votes the accession to power of some Government, 
which may be represented as being particularly unwelcome to 
them. For if the new tasks of social democracy are fully as im- 
portant as the old, yet they are, it must be admitted, a good 
deal more difficult and arduous. Always hitherto the social 
democrats have been able at any rate to speak about advances 
and improvements in working-class conditions. Thus, in the 
post-war crisis of capitalism, the function of the workers' leaders 
was to moderate, to tone down, demands for higher wages and 
shorter hours. And capitalism, only too thankful to buy off such 
formidable opponents so cheaply, did often make small, but to 
the workers valuable, concessions. Thus the influence of the 
social democrats was actually increased by their activities. On 
the political side, during the period of increasing electoral suc- 
cess, the party theorists could weave the most elaborate schemes 
of socialization, and the party orators call for extensive meas- 
ures of nationalization, to be put into effect by future Social 
Democratic Governments. 

The present tasks of social democracy are more delicate. 
Industrially, the trade union leaders have not now the compara- 
tively simple task of obtaining some, if not all, of the concessions 
demanded by the workers. On the contrary their job is to secure 
the acceptance of the greater part of drastic cuts demanded by 
the employers. The politicians cannot now be much concerned 
with promises of what they will give the workers in return for 
their vote. They are increasingly reduced to threatening that 
still worse will befall the workers if they vote for someone else. 

Moreover, it becomes necessary for the social democrats at the 
same time to reassure the capitalists and to maintain their hold 
over the workers. In Great Britain, traditionally the motherland 
of political invention, the defeated social democrats solved their 
difficulties after the 1931 election by flatly contradicting each 
other. It was a sort of political division of labour. Some of the 
ex-Ministers undertook the task of assuring the capitalists that 
the Labour party was even more innocuous than it looked : that 
the murderous kick which the capitalists had given it was wholly 
undeserved. At the same time, other ex-Ministers undertook 



882 THE COMING STRUGGLE FOR *OWER 

the work of assuring the workers that if the Labour party 
had in the past failed to achieve very much, yet in the future a 
far more vigorous and militant policy would bring untold bene- 
fits. Thus, some leaders went to the Left, some to the Right. 
One may contrast, for example, the following four statements of 
policy, all made during the early months of 1932 by prominent 
Labour leaders. Mr. Herbert Morrison, the defeated Minister of 
Transport, remarked at Bristol that " Socialism in our time is 
all romanticism." Meanwhile his colleague, Sir Stafford Cripps, 
was saying, " Gradualism is gone from the Labour programme 
for ever." (It is of course open to Sir Stafford to reconcile his 
views with Mr. Morrison's by saying that he meant that in future 
the Labour party would not attempt even the most gradual 
approach to socialism. But I hardly think that he will take 
that line.) Mr. Greenwood, the defeated Minister of Health, was 
also bent on denying, to the members of the Cambridge Uni- 
versity Socialist Society, any tendency to timidity on the part 
of his party. " I know," he said, " the Communists are always 
saying that the Labour party suppresses the militancy of the 
working-class. This is absolutely untrue ; the working class in 
this country is not militant, and if it were the Labour party 
would welcome it." Mr. Walter Citrine, the Secretary of the 
Trade Union Congress, took another view however. Speaking in 
the more mixed atmosphere of the Union Debating Society, he 
evidently considered it his function to prove how well he de- 
served of the capitalists. He remarked, with pardonable pride, 
44 Many of you probably don't realize what a difficult task some 
of us have in preventing the trade unions from becoming dan- 
gerous revolutionary organizations." 

In Great Britain the social democrats are still in this stage of 
the division of labour. In Germany, they all speak with one 
voice, but they speak, not to cajole but to threaten. For in 
Germany, the crisis of capitalisnTis far more severe. Thus, in the 
Presidential elections of March 1982, the German social demo- 
crats could not run a candidate of their own at all and had to set 
themselves the task of inducing the workers to vote for Field 
Marshal von Hindenburg, in order, not to achieve anything, but 
to prevent the election of Hitler. (The difficulty of the task may 
be seen from the fact that even this most formidably organized 



THE FBTUBE OF SOCIAL DEMOCRACY 888 

of all social democratic parties could not prevent five million 
workers from voting communist.) Nor is this an isolated example. 
The whole policy of German social democracy in supporting the 
Briining Government, which imposed enormous sacrifices upon 
the workers, had to be defended as a policy of supporting the 
** lesser evil." The menace of fascism as the greatest abstract 
evil had to be continually conjured up before the eyes of the 
German workers in order to induce them to accept any concrete 
" cut " at the hands of the ordinary official capitalist parties. 
Nor will this state of affairs be long confined to Germany, 
Austria, and the other capitalist states which are worst hit by the 
crisis. Already the official policy of the Second International is 
to place the menace of fascism above every other consideration. 
For this is the sole way by which the workers can be induced to 
accept the ever more desperate sacrifices imposed upon them by 
existing capitalist Governments. 



As it has been suggested that the text of line 22 to the end of 
the paragraph, page 332, is not an accurate quotation of what 
Mr. Citrine said, the reader should substitute the following 
words : 

Mr. Walter Citrine, Secretary of the Trades Union 
Congress, took another view, however. Speaking in 
the more mixed atmosphere of the Union Debating 
Society, he argued that it was essential to maintain 
a close connection between the Trade Unions and the 
Parliamentary Labour Party. If the Unions were cut 
off from Parliament, they might be forced to convert 
themselves into revolutionary bodies, and he asked the 
audience not to dismiss that proposition very lightly. 



struggle. For the trade unions are by their very nature so* intimately connected 
with the workers' daily struggle for existence that they are susceptible to the 
mass pressure of their members, in times of crisis at any rate. Hence, all revolun 
tionaries should be inside the trade unions. 



884 THE COMING STRUGGLE FOR POWER 

which people may quite sincerely entertain about their own 
functions do not alter in the least the actual facts of the situa- 
tion the fact, for example, that objectively all social democrats 
are being used as a means of controlling the workers in the 
interest of capitalism. 

And what an incomparable instrument they are ! The more 
unconscious of their real function, the more naively and sin- 
cerely anti-capitalist, the " non-commissioned officers " the 
part-time trade union organizers, branch secretaries, local 
party agents and the like may be, the better will they perform 
their task of binding the workers to the social democratic 
machine, and consequently to capitalism. For when the worker 
is told that " old Joe " the secretary, let us say, of the local 
branch of the National Union of Railwaymen is a capitalist 
agent in their midst, he simply will not believe it. He knows that 
it is untrue. But that does not prevent " old Joe," however 
sincere that individual may be, from being joined by an un- 
broken chain of trade union officials, each link of which is a 
little more conscious of the real task which he is performing 
than is the link below him, to a national leader of the type of 
Mr. J. H. Thomas. And Mr. Thomas used half the time hardly 
even to trouble to pretend that he was much more than a sort 
of special officer of the railway companies, charged with dealing 
with " labour problems." Moreover, just as the task of social 
democracy is becoming more onerous, just as its propaganda 
has to concern itself more with playing on fears and less on 
hopes, more with threats and less with promises, than ever 
before, so its methods also are changing. 

The relationship, for example, of the trade union machine to 
its membership is in some cases beginning to lose its voluntary 
character. Just in so far as the trade unions become a part of the 
structure of capitalist industry and this is now one of their 
conscious aims they become part of the apparatus of capitalist 
coercion. And in many British and German industries in which 
powerful but reactionary unions exist, this is what is visibly 
taking place. It does not mean, of course, that all friction be- 
tween the trade unions and the employers will cease. Even if a 
union were actually to become a department of the big trust 
pr corporation which is running the industry m which its 



THE FUTURE OF SOCIAL DEMOCRACY 885 

members worked (and things never go as far as that) it would not 
mean that a conflict of interest might not occur. On the con- 
trary, bitter disputes notoriously occur between the departments 
of big organizations. Thus, even the most reactionary union 
does not simply carry out the wishes of the employers without 
question. To suggest this would be greatly to over-simplify the 
position. On the contrary, the union will always put up the case 
against, say, wage reductions, just in the way in which a " Per- 
sonel Department," as the Americans call it, would do. But 
when once the employers are finally determined on " cuts," 
then the role of the union is always to minimize their amount 
sufficiently to make it possible to persuade the men to accept 
them without resistance ; or. if this is impossible, to minimize 
the intensity and duration of the men's resistance, and to induce 
acceptance of the slightest concession from the employers. 

Once again, objectively, and quite without reference to any- 
one's ideas about what he is doing, the trade unions more and 
more act as the instruments by means of which the capitalists 
make wage contracts with the workers. Inevitably therefore the 
same methods of extra legal (not illegal but merely economic) 
coercion, which the employers have always used to secure 
workers for their factories are now used by the trade unions to 
secure that the workers remain " organized." For example, in 
some " well-organized " trades, the possibility of employment 
is largely confined to trade unionists. Thus, a member who is 
giving trouble, who is suspected of communist leanings for ex- 
ample, can have the terrible threat of unemployment suspended 
over his head by the mere mention of his expulsion from the 
union. (The expulsion of a group of prominent members of the 
Amalgamated Engineering Union, for no other crime than that 
they held political opinions obnoxious to the paid officials of the 
union, is a recent and notorious example of this procedure.) 
Again, the administration of a complicated system^ 
surances is becoming to some extent bound 
union machine. In Great Britain, for exampl 
worker can in certain important cases appeal < 
ance of unemployment benefit only if he is a J 
union and if he makes his appeal throv 
officials* 




988 THE COMING STRUGGLE FOR POWER 

Nevertheless, in some cases, old-fashioned employers are still 
fighting the trade unions. They dream of the days when no 
apparatus for the control of the workers was necessary, and their 
simple fiat settled everything. They still resent the degree of 
complication, argument, and sometimes expense (by way of 
payments to officials, etc.) which dealing with even the most 
reactionary union entails. All the more modern employers realize, 
however, the inevitability of trade union organization. Like Mr. 
Citrine, they know that the alternative to the present reactionary 
unions is not no unions, but revolutionary unions. Accordingly, 
they do all in their power to strengthen the hands of the existing 
unions. They see that their officials are received at the manager's 
office : that small concessions are made after their representa- 
tions : that the union officials are able to claim that so many 
cases of accident insurance, old age pensions, and the like, have 
been successfully negotiated by them. Above all, they allow the 
union officials to have a say in the all-important matter of who 
is discharged, and who given employment. 

Perhaps the most complete example of the tendency of 
modern big business to incorporate the trade union apparatus, 
and thus make it a part of its own system of labour controls, 
was represented by the well-known " Mond-Turner " conference 
in Great Britain in the period of extreme reaction after the 
General Strike. These negotiations, though of the greatest 
psychological significance, did not end in any overt agreement. 
And, from the point of view of both parties, this was wise. 
For any written bargain between the employers and the trade 
union officials would have been far too open to attack. A tacit 
understanding served their purposes far better. The sign of the 
real success of the negotiations was the receipt of honours by 
both parties. Sir Alfred Mond became Lord Melchett, and Mr. 
Ben Turner became Sir Benjamin. 

The trade unions, since they are the organ of social democracy 
which is dealing with actual everyday life, exert the most im- 
portant part of the social democrats' hold over the workers. 
But at election times, the Social Democratic party, as we have 
seen, plays the same role* And, already in countries such as 
Germany, the whole strength of the social democratic propa- 
ganda machine has been put at the disposal of a capitalist 



THE FUTURE OF SOCIAL DEMOCRACY 887 

Government, in order to enable that Government to direct the 
workers' votes toward an agreed candidate. In general, there- 
fore, we may prophesy that the social democratic system will, 
more and more, become the mechanism by which the capitalists 
control the workers. And while in the end this will break its 
hold over the workers' minds, yet it immediately increases its 
hold over their bodies. Social democracy, by selling itself to the 
ruling class, receives in return some of those formidable weapons 
of coercion which the employers have always used against the 
workers. The trade unions, from being outlaw organizations, 
become " valued collaborators in industry " : the Social Demo- 
cratic parties become the trusted electoral allies of the capitalist 
parties, privileged even to support field marshals 1 And the 
social democratic Press is suddenly equipped with all the re- 
sources of capital. The Daily Herald, the newspaper of the 
British Labour party, for example, from being a struggling party 
sheet became overnight the lavishly equipped organ of Messrs. 
Odhams, a large and rising newspaper trust. The social demo- 
crats, even if their new masters do occasionally treat them a 
little roughly, as in the British 1981 election, are not on the 
whole ill recompensed. 

The way is now clear for the final development. For social 
democracy has become the instrument of the capitalist class 
just when that class itself is moving strongly towards the em- 
ployment of new methods. Fascist methods, we have seen, are 
becoming more and more necessary to the capitalists. How ex- 
cellently the social democratic machine, the new instrument of 
policy which the capitalist class is acquiring from the workers, 
is suited to this tendency. For a capitalist class, using fascist 
methods, will not dare to allow the workers to remain unor- 
ganized. In order to prevent the workers from being organized 
against them, the capitalists must organize the workers them- 
selves. What better instrument would there be for this purpose 
than those original working-class organizations, whose leaders 
can very easily be brought to see a resemblance between the 
socialism they used once to preach and the fascism which they 
are now required to practise? Thus social democracy, while 
passing its furious resolutions against " the menace of fascism," 
while sacrificing every present working-class interest to the plea 

JckP 



888 THE COMING STRUGGLE FOR POWER 

that only so can this menace be avoided, is all the while itself 
laying down the working-class organization necessary to a 
fascist system. Social democracy becomes in fact " Social- 
Fascism." 

We have now made some attempt to comprehend the nature 
of social democracy : to understand the question of why it was 
that the workers, apparently well organized, and certainly 
suffering most acutely from the growing disorders of capitalism, 
did not present an immediate and conclusive challenge to the 
existing system. The truth is that those very organizations of 
working-class revolt, which the workers have gradually and 
painfully created over nearly half a century, have now passed 
over almost completely to the side of capitalism. Far from being 
an assistance to the workers in their life-and-death struggle, 
they are to-day by far the most formidable obstacle in the way 
of an early victory. They force upon the workers the immediate 
task of recapturing these organizations, or of freeing themselves 
from them and developing new and reliable organs of struggle. 



V.R.MASU' 



PART VI 
COMMUNISM 



V. P NABI A 



CHAPTER XIX 
The Nature of Communism 

THE first half of this book was devoted to a discussion of the 
nature of capitalism. We came to the conclusion that capitalism 
was a method of organizing production by means of the con- 
centration of the ownership of the means of production in the 
hands of a class, and the adjustment of the economic life of the 
community by a reliance upon the motives of the market. We 
traced in some detail the present difficulties of this system and 
came to the conclusion that they were insuperable. 

The last seven chapters have consisted in an analysis of the 
nature of imperialism, the present and ultimate phase of 
capitalism, and of a description of social democracy. The last 
part of the book is devoted to a discussion of communism. 

Communism is a principle of social organization antithetical 
to capitalism. It solves the problem of organizing production 
by entirely different methods. It does not attempt to secure 
the concentration of the means of production by vesting their 
ownership in the hands of a class, nor does it leave the adjust- 
ment of the life of the community to the motives of the market. 
Indeed, communist methods of organizing production cannot 
be even attempted until the class ownership of the means of 
production has been ended, and until the economic adjustments 
of society have been freed from the influence of the motives of 
the market. 

Now, communism proper, namely, that system of society 
in which the principles of social organization which we shall 
describe immediately have been fully developed, can only start 
to come into existence with the overthrow of capitalism. Hence, 
a very considerable period must elapse after that event before 
a full communist society can appear. All that we can do to-day 
is to envisage the general principles upon which a society of 
full communism will be based.NWe can say that such a society 
will be based upon the principle of need P/that the goods and 
services created will be sufficient to allow of their distribution 
upon the principle that everyone can, have as much of them as 
hejag$ds :%that their production will be so little toilsome that 



842 THE COMING STRUGGLE FOR POWER 

it can be organized upon the principle that each citizen shall 
contribute that quota of service which he is able to contribute, 
and that these citizens shall be of such a kind as to make such 
principles of distribution and production workable. Such a 
society would, of course, be moneyless as well as classless. 

Marx long ago distinguished (in his criticism of the Gotha 
programme of the German Social Democratic party) between 
such a fully communist society and the type of society which 
the working class would establish on the morrow of capitalism. 
He showed that what it would be possible to abolish on the 
morrow of the revolution would be the gross inequality of 
capitalism, namely, the inequality between the workers who 
receive a subsistence wage for performing the work of society, 
and those owners of property who receive extremely large 
incomes for doing nothing. Society could immediately be 
organized upon the basis of payment for work done, and for 
nothing else. But to suppose that a working-class community 
could immediately leap forward to an application of the prin- 
ciples of distribution suitable for a fully communist community, 
and give all its members an equal claim to the stock of social 
wealth, was utterly Utopian. 1 

Marx, then, distinguishes clearly a primary, transitional, 
stage of communism, which must follow the revolution. In this 
stage, payments are made to the members of society in respect 
of the duration and the intensity of work done. It is this stage of 
communism which we shall consider in this chapter. For, the 
most interesting question to us is the question of how the work- 
ing class will organize production after the revolution. It must, 
therefore, be clearly understood that when we use the word 
communism we use it to denote not ultimate, fully developed, 
communism, but the primary transitional stage of communism 
which must follow the overthrow of capitalism. 

A distinguishing feature of communism, we have said, is 
that it does not seek to use the motives of the market, the 
motives, that is to say, of private profit, as the prime mover of 

1 How much ink and paper the Riga correspondent of the London Times 
would have been saved if he had ever read this passage from Marx. He need never 
have given us these almost daily reports of how the Russian Government has 
abandoned every principle of Marxism and communism, and has established a 
system ** of payments by results." 



THE NATURE OF COMMUNISM 848 

the productive machine of society. It substitutes for this motive 
force a pre-arranged plan under which the multitudinous tasks 
necessary to the life of the community are consciously and 
regularly allotted to its members. Now we saw that reliance 
upon the mechanism of the market, alone, enables capitalism 
to avoid an open and avowed slavery for the working class. 
Communism, however, is able to abolish the mechanism and 
the motives of the market, without reducing any part of the 
population to serfdom. For under a system of communism, the 
instruments of production are taken out of the hands of their 
present owners and are vested in the hands of the working class. 
And as the consequence of that act, the working class becomes 
coterminous with the community as a whole. For a member of 
the capitalist class shorn of his possession of the instruments 
of production becomes, objectively though not subjectively, a 
member of the working class. 

Lest this very simple proposition be questioned, as it is, of 
course, continually questioned, and it be suggested that a^ 
communist society involves industrial serfdom, " state-slavery " 
and the like, it may perhaps be useful to quote the testimony 
of one of the most strongly anti-communist thinkers of to-day. 
We have already referred to The Servile State, one of the earlier 
works of the Roman Catholic writer, Mr. Hilaire Belloc. 

Mr. Belloc agrees that the communist solution avoids what 
he calls " the servile state," that is, serfdom for the workers. He 
states this very clearly on page 18 of the new edition of his book. 

" Similarly, that State is not servile in which att citizens 
are liable to submit their energies to the compulsion of posi- 
tive law, and must labour at the discretion of State officials. 
By loose metaphor and for rhetorical purposes men who dis- 
like collectivism (for instance) or the discipline of a regiment 
will talk of the c servile ' conditions of such organizations. 
But for the purposes of strict definition and clear thinking 
it is essential to remember that a servile condition only exists 
by contrast with a free condition. The servile condition is 
present in society only when there is also present the free 
citizen for whose benefit the slave works under the compulsion 
of positive law." 



844 THE COMING STRUGGLE FOR POWER 

Mr. Belloc's last sentence is the important one. Serfdom and 
freedom are, in other words, what Hegel called " reflex cate- 
gories." The one cannot exist without the other. Hence, in a 
communist society, which has actually succeeded in abolishing 
social classes, in which there no longer exists a category of 
persons living on income drawn in respect of their ownership 
of the means of production, there is literally no meaning in such 
expressions as serfdom, slavery, " the servile state " and the 
like. 

We are in a position to attempt a definition. A communist 
society (in its primary transitional stages) is one in which the 
mechanism of the market has been superseded by a planned 
direction of production ; in which this change has been effected 
by taking the instruments of production from their present 
owners and vesting them in the hands of the working class. In 
consequence of this act, the working class gradually becomes 
identical with the community. Thus, a community without 
social classes comes into existence, a community in which 
all its members live upon incomes derived from the same 
source. For these incomes consist of payments made, by 
way of wages, social services or the like, from the flow of use- 
values maintained by the operation of the available means of 
production. 

We may observe that it is this identity in the source from 
which all incomes are derived, rather than any precise similarity 
in their amounts, which characterizes a communist society. 
Naturally the amounts of incomes will vary much less in a com- 
munist society than in a capitalist society. 1 But this is not the 
distinguishing factor. The distinguishing factor is that in a 
communist society no incomes shall be derived by virtue of the 
possession of the instruments of production : that all shall be 
derived by virtue of services rendered, either now, in the past, 
or in the future. And it is only in so far as this state of affairs 

1 Thus, even in the Soviet Union to-day, which, as we shall see, lays no claim 
to being as yet a communist community, the maximum " spread ** of the varia- 
tions of incomes seems to be from about fifty roubles a month to a thousand 
roubles a month. In Great Britain, the maximum spread must be from under 4 
a month to say, 120,000 a month. In Russia, then, the variation is as 1 to 20 : 
in Britain, as 1 to 80,000. 



THE NATURE OF COMMUNISM 845 

comes into existence in any community that it can claim to have 
abolished social classes and to be, in fact, a classless communist ' 
community. 

We shall also observe that a communist society does not 
distribute everything which it produces to the individuals who 
compose it. Each worker as an individual receives less than he 
creates by his labour. For a part of the productive energies of 
society are devoted to producing capital goods instead of con- 
sumable goods. These new capital goods are retained by the 
working class, which has become the community, and are used 
as the workers decide. In any given communist community, 
such and such a proportion of these new capital goods may be 
devoted to the production of further means of production, and 
such and such a porportion to the production and upkeep of 
objects of utility, which are by their nature only enjoyable by 
the workers in common, for example, the production and upkeep 
of public buildings, theatres, museums, sports stadia, parks, 
playgrounds, rest-houses and the like. Again the workers, the 
community as a whole that is, will decide what proportion of 
its energies shall be devoted to the production of capital and 
consumable goods respectively. A communist community 
might, for example, in theory at any rate, decide to create only 
enough capital goods to enable the existing instruments of 
production, and such objects of utility as were held in common, 
to be kept in repair, and to distribute all other products to 
individuals in the form of consumable goods. Conversely a com- 
munist community might choose to apply a very high propor- 
tion of its resources to the production of capital goods. In either 
case, the distinguishing factor between a communist community 
and a capitalist community is the fact that under communism 
both the amount of capital goods annually produced, and the 
uses to which they shall be put, are under conscious control, 
while under capitalism these factors are left to the adjustment 
of the motives of the market. 

Communism is, in one aspect, a new solution to the original 
problem of the collective labourer. Large-scale methods of pro- 
duction involve, we saw in Chapter II, some method of mobiliz- 
ing large numbers of labourers and of either compelling or induc- 
ing them to work at a common task. This problem has been 



846 THE COMING STRUGGLE FOR POWER 

solved in the past in two ways. In classical antiquity, compara- 
tively large-scale production was conducted by means of direct 
forcible compulsion by the class of freemen exercised upon the 
class of slaves. Under capitalism it was, and is, conducted by 
means of the indirect economic compulsion of the class of the 
owners of the means of production, exercised upon the class of 
the workers, or non-owners of the means of production. The 
establishment of a communist system marks the substitution 
of a third and new method. For the assumption by society, by 
the working class that is, which in the very act becomes society, 
of the ownership of all the means of production makes it pos- 
sible to solve the problem of the collective labourer by the 
method of the voluntary association of the workers for large 
scale production. An immense scepticism exists in regard to 
this conclusion. Such scepticism is partly the result of the 
" mental climate " of capitalism in which we all live ; and it 
is partly the result of a misunderstanding of what is meant 
by voluntary association. Now nobody is suggesting that in a 
communist society everybody will perform the arduous and 
unpleasant work which, for a good many decades, will still be 
necessary, for the sheer love of the thing, and without control 
and supervision. What is suggested, however, and what is 
already beginning to be indicated in practice, is that in a class- 
less society, the necessity and obligation to work will be uni- 
versally felt. In fact, of course, the realization that only by 
labour can man induce his environment to yield him a livelihood, 
is an immemorial and by now innate constituent of the conscious- 
ness of the race. Only amongst some of the oldest aristocratic 
and capitalist families in long-settled communities, which have 
for several generations lived exclusively from incomes derived 
from the ownership of the means of production, has this realiza- 
tion decayed. For the overwhelming mass of mankind, the 
necessity, albeit the unpleasant necessity, to work, is an assump- 
tion which is not questioned. In the old decaying capitalisms 
of the west, the natural position has, indeed, been inverted, 
and one of the principal claims of the wage earners is now " the 
right to work." This does not mean that the wage earners have 
a passion for spending eight hours a day in factory or mine. 
It means that the association of receiving an income and of 



THE NATURE OF COMMUNISM 847 

working has become so fixed that the tacit assumption is made 
that only by working will an income be forthcoming. Hence, 
in a communist society, in which no citizen derives income from 
rights of ownership, there is not the slightest doubt that the 
population as a whole will appreciate perfectly the necessity 
to work. And this is what is meant by the principle of voluntary 
association, as the solution of the problem of the collective 
labourers. 

What in practice happens in a communist society is simple. 
Society, through the institutions (councils, committees, call them 
what you will) which it sets up for the purpose, frames a body of 
rules for the duration, conditions, and remuneration, of the 
work which different categories of its members must perform. 
And these rules the members of society impose upon themselves. 
They see the necessity of going each day to factory, mine or 
field, and utilizing the means of production to satisfy their 
needs. Naturally, this does not mean that individuals here and 
there will see any such necessity : that particular individuals 
will not seek to enjoy the social fruits, without undergoing the 
social labour necessary to their production. And it will cer- 
tainly be necessary to enforce compulsorily upon such indivi- 
duals the rules of work which society has laid down. And all the 
other members of society will be strongly in favour of such an 
enforcement. For no one likes to have the maintenance of his 
neighbour imposed upon him by that neighbour's idleness. 
Hence, the obligation to work which in a communist society is 
binding upon all its members, is not in the least a contradiction 
of the principle of voluntary association upon which the pro- 
ductive activity of such a society is based. For the obligation is 
self-imposed. 

^No community, however, can pass overnight even to the 
primary transitional stage of communism. In the early stages of 
a working-class dictatorship, it may even be true to say that the 
obligation to labour is a compulsion imposed by the conscious 
and reflecting members of society both on themselves and on 
those members who, if left to themselves, would not realize the 
desirability of more labour than would just maintain themselves 
on the most primitive standards. Even at this stage, however, 
the labour performed in a classless society will be far more 



848 THE COMING STRUGGLE FOR POWER , 

voluntary in character than the labour which the iron, if invisible, 
compulsions of capitalism extort from the workers. And, with 
every year that passes, a greater proportion of the population 
will emerge from the category of persons on whom regularity, and 
a minimum of intensity, of work have to be imposed, into the 
category of persons who realize fully the universal benefits of 
such labour, and who themselves take a conscious part in carrying 
it out. Moreover, with each advance in the level of technique, 
the character of necessary labour will change ; it will become 
less irksome and arduous, more interesting and less exhaust- 
ing. The barrier between mental and physical labour will be 
broken down. This will be done, partly by the actual interchange 
of personnel between manual and administrative tasks which 
becomes possible when a classless society reaches a certain level 
of culture, partly by the growing importance of labour which, 
like so much modern scientific labour, is mental and manual at 
the same time. With these changes the remaining elements of 
compulsion will slowly disappear. The process will be neither 
short nor simple but the direction is clear. 

In order to hasten this process, communism requires, and re- 
quires urgently, the very maximum possible application and ex- 
tension of scientific knowledge. The ruling class, which must 
rapidly become coterminous with society as a whole, will have 
a direct and personal interest in minimizing the amount of 
human toil necessary to a given standard of life. Since under 
communism there is no longer an antagonism of opposite status 
freeman and serf, property owner and proletarian, man will be 
at last in a position to turn his entire energies to the subjugation 
of his oldest antagonist, nature. Indeed, just as communism 
only becomes possible when previous social systems have raised 
the level of man's comprehensive-command over nature to a 
certain point, so the maintenance of communism is closely asso- 
ciated with a continued development of scientific knowledge and 
skill. After all, it is only natural that when the men and women 
who do the work of society also control society, they will eagerly 
pursue every possibility of lightening the burden of toil which 
humanity has hitherto had to carry. Rapid scientific develop- 
ment will everywhere follow, as it followed in Russia, the estab- 
lishment of working-class power. For there will be no ruling 



THE NATURE OF COMMUNISM 840 

class to fear that any change in society will be for them a change 
for the worse. No one will fear to make those continual readjust- 
ments of the social structure, which are necessitated by develop- 
ments of scientific technique. 

This brings us to a wider consideration. Since there are, by 
definition, no classes in a communist society, there can be no 
class friction : there can be no necessity for those immense ex- 
penditures of social effort which are to-day necessary in order 
forcibly to adjust the relationship of inherently antagonistic 
classes. How immense a gain this is can be realized only when we 
appreciate the fact that the State itself is such an organization of 
forcible class adjustment. No honest observer of the modern 
State can possibly deny that it is, in fact, an apparatus, the 
primary purpose of which is to uphold the present social hier- 
archy. Remove class conflict in the only way in which it can be 
removed, namely, by the abolition of classes, and nine-tenths of 
the present activities of the State become redundant. What are 
left are not really State activities at all ; they are rather eco- 
nomic functions of regulation and distribution which are not 
part of the original work of the capitalist State at all : they are 
functions which it has assumed during the period of the growing 
chaos of capitalist production. Such functions can easily be 
distinguished by the fact that they involve essentially the ad- 
ministration and manipulation of things : while the proper and 
traditional functions of the capitalist State consist in the 
coercion of men. (For example, the classical function of the 
capitalist State is to enforce contracts to which one of the parties 
was not a free agent ; to uphold the labour contracts which the 
workers are driven to accept since they are faced with the alter- 
native of starvation.) 

This, then, is the distinguishing factor : in a communist society 
those functions of the State which consist in the regulation and 
planning of things, of the control of nature, will long persist and 
at first increase ; but those functions of the State which consist 
in the coercion of persons will disappear just in so far as social 
classes disappear. 

Thus a communist society, and a communist society alone, 
will be able to dispense with that immense apparatus of coercion 
which all societies divided into antagonistic classes must for ever 



850 THE COMING STRUGGLE FOR POWER 

maintain. For this apparatus of coercion, the police, the present 
judicial system, the armed forces of the State, in one of their 
aspects, are simply the methods which a class society must take 
in order to overcome the huge amount of social friction which it 
sets up. 

We now come to the most striking of all the contrasts between 
communism and the present, imperialist, phase of capitalism. 
Communism is, in its very essence, internationalist. Just as com- 
munism provides the only possible solution of the problem of the 
class conflict by abolishing classes, it also provides the only solu- 
tion of the problem of the international conflict, by abolishing 
national sovereignties. It is non-national, both in its economic 
basis and the system of ideas which it builds upon that basis. 
A communist economy cannot possibly admit of national bound- 
aries. 1 A single planned economy must extend throughout the 
area which has become communist. Thus there cannot ever be 
(unless very temporarily and because of the force majeure of an 
intervening capitalism) two communist nations in the world at 
the same time. So soon as the working class obtains power in any 
state it will, as well for the most urgent practical reasons as 
for theoretical considerations, fuse with all other areas within 
which the workers have either previously or simultaneously 
taken power. For example, when the German working class 
obtains power, the world will not see a communist Germany and 
a communist Russia. There will still be one Union of Socialist 
Soviet Republics, but now it will extend westwards to the 
Rhine. And in the case of so large and advanced a state as Ger- 
many being captured by the working class, the centre of gravity 
of world communism may tend in some respects to shift west- 
wards towards Berlin. (Lenin has an interesting passage on this 
possibility. He writes : " It would be likewise erroneous not 
to keep in mind that, after the proletarian revolution in at least 
one of the advanced countries, things will in all probability take 
a sharp turn ; Russia will cease to be the model, and will be- 
come again the backward (in the ' soviet ' and socialist sense) 
country." Left Wing Communism.) Now it will hardly be 

The abolition of nations as political and economic units is, however, perfectly 
compatible with the development and flowering of national cultures. The point 
is developed in Chapter XXI. 



THE NATURE OF COMMUNISM 851 

disputed that new areas in which wot king-class dictatorships are 
set up will in fact, for the most urgent purposes of self defence, 
coalesce with the existing communist communities, just as the 
various republics of the present Union coalesced for defence 
during 1918 to 1921. But how, it may be asked, will such larger 
coalitions of communist communities adjust their economic life ? 
Will it be as easy to adjust the economic claims of a great his- 
toric area such as Germany, with those of Russia, when con- 
structing future Five Year Plans, as it has been to adjust the 
respective claims of, say, the Ukraine and the North Caucasus ? 
The answer must be that although in the early stages such an 
adjustment may not be easy yet it will be intrinsically possible 
in a sense in which it is intrinsically impossible to adjust the con- 
flicting claims of two separate capitalist states. For confirmation 
of this fact we may again appeal to Mr. Hawtrey. The reader 
may recall (Chapter IV, page 81) the passage from his book 
Economic Aspects of Sovereignty, in which he contrasted the 
objective of " welfare " with the objective of " power " as 
" economic ends." It may be well to reproduce the passage here. 

" We are accustomed to think of economic ends in terms of 
welfare, but in matters of public policy that is never the whole 
story. To each country power appears as the indispensable 
means to every end. It comes to be exalted into an end itself. 

" So long as welfare is the end, different communities may 
co-operate happily together. Jealousy there may be, and 
disputes as to how the material means of welfare should be 
shared. But there is no inherent divergence of aim in the 
pursuit of welfare. Power, on the other hand, is relative. The 
gain of one country is necessarily loss to others ; its loss is 
gain to them. Conflict is of the essence of the pursuit of power.'* 

If we admit, as Mr. Hawtrey may or may not admit, that the 
ultimate end of capitalist states, for which they seek power as 
the inevitable means, is not the welfare of all their citizens, but 
the wealth of their property-owning citizens, we may accept this 
analysis. The immediate object of all capitalist states is, as Mr. 
Hawtrey shows, the pursuit of power ; and the pursuit of power 
must engender armed conflict because power, Uke slavery, is a 



852 THE COMING STRUGGLE FOR POWER 

reflex and not an absolute category. One empire's power, that 
is to say, is necessarily and always the weakness of another 
empire. Hence, the simultaneous pursuit of power by several em- 
pires is the pursuit of an end unobtainable for more than one of 
them. And a finally victorious empire can dhly obtain its end, 
and make power at last an absolute category, by irrevocably 
reducing all its rivals to impotence. The pursuit of welfare is 
obviously, however, the only economic end which a communist 
community will propose to itself. For welfare, their own welfare, 
that is, is clearly the only end which the workers are interested 
in. Nor will power, the power, that is, of their nation appear to 
the workers as the prerequisite of their welfare. For separate 
sovereignties, and the international anarchy which they entail, 
will have disappeared. The wealth of the capitalists of Britain, 
for example, is dependent upon their power, relative to the 
power of the capitalists of the United States. But the welfare of 
the workers of a Soviet Britain will in no way depend upon their 
power relative to some other constituent part of the world- wide 
Union of Soviet Republics. Hence, it will be possible for such 
communities, and for such communities alone, " to co-operate 
happily together." For welfare, the end which they pursue, is an 
absolute category and its attainment by one is not in the least 
exclusive of its attainment by the other. " Jealousy there may 
be," we shall agree with Mr. Hawtrey, " and disputes as to how 
the material means of welfare should be shared. But there is no 
inherent divergence of aim in the pursuit of welfare." 

Thus we arrive at the crucial contrast between communism 
and present-day capitalist imperialism. Communism does pro- 
vide a basis upon which the world can be progressively unified. 
For it provides a ruling class (gradually to become identical with 
society as a whole) whose end can be welfare not power. And the 
attainment of welfare by one area of the world is complementary 
to the attainment of welfare by another, while the attainment 
of power by one area is contradictory to the attainment of power 
by another area. 

Again, of course, in the field of ideas, communism is neces- 
sarily and notoriously internationalist. For just as the capitalist 
class is driven, in order to maintain itself in power, to seek 
to divide the workers into mutually odious national groups, so 



THE NATURE OF COMMUNISM 858 

the conscious elements in the working class, in order to achieve 
working-class power, must necessarily urge the basic identity 
of interest, the basic solidarity, of all workers ; must urge the 
unreality in the modern world of national divisions, and the 
reality of class divisions. Hence, all communist propaganda 
necessarily seeks to bind the workers of the world together, to 
unify and not to divide, and thus prepares the way for that 
close collaboration of communist communities for which their 
economic characteristics provide the objective basis. 

There is little doubt that this final distinction between com- 
munism and any system of society involving the existence of 
antagonistic social classes, is the decisive factor when we come 
to consider the further question of whether communism is likely 
to conquer the world during this century. Communism is inher- 
ently capable of world unity : capitalist imperialism is inherently 
incapable of world unity. This advantage of communism will out- 
weigh in the long run all the factors in which it is so glaringly 
at a disadvantage. Communism is to-day extremely weak in 
material power as compared to world capitalism. World capi- 
talism has resources of violence which united could, it would 
seem, crush the forces of communism without difficulty. But it 
is, we have shown in some detail, of the inmost essence of world 
capitalism that these resources can never be united. Thus, a 
wholly misleading picture of the world situation is painted if 
we add, say, the American, British, French and Japanese armed 
forces together and compare them to the armed forces of the 
Soviet Union, plus the assistance which the resistance of the 
workers in the capitalist countries would lend to the communist 
side. For the armed forces of, say, Britain and America must be 
rather subtracted the one from the other. They are pointed quite 
as much against each other as against the Soviet Union. They 
may, it is true, at any given moment come together for the 
express purpose of an attack on the Soviets. But that moment 
of unity must, by the very nature of capitalist imperialism, be 
transitory. For Mr. Hawtrey's " continuous struggle of national 
force " must at once reassert itself. Even if the imperialist 
powers attacked Russia, as indeed they sooner or later must do, 
and even if their attack for a time succeeded, they would cer- 
tainly quarrel again over the booty. They cannot possibly avoid 

YP 



854 THE COMING STRUGGLE FOR POWER 

the necessity of fighting out amongst themselves the battle for 
world supremacy. And it is inconceivable that they can avoid 
their own self -destruction in such a struggle. 

We have now sketched the basic outlines of the primary stage 
of communism. And that is all that can be done. For it is no 
part of the purpose of these pages to paint the portrait of 
another facile Utopia. 

But it would be absurd to consider the nature of communism 
without alluding to the Soviet Union. The first thing, however, 
which we must observe is that never has a single Soviet leader 
claimed that the Union is to-day a communist community. The 
Soviet Union cannot be considered to be as yet a community in 
even the primary stage of communism, which we have defined. 
Many capitalist remnants are still present. It is hoped, however, 
that by the end of the Second Five Year Plan, in 1937, that is, 
it will be possible to speak of a communist society in Russia. 
Both Lenin and Stalin, for example, have been scrupulous to 
point out that it would be childishly and ridiculously un-Marxian 
to suppose that the Russian republics could leap in a year or so 
from the conditions of 1917 into communism. The most his- 
torically minded men who have ever ruled, the leaders of the 
Russian Revolution, were not likely to make so elementary an 
error. Not only was Russia in 1914 only beginning to assume the 
aspects of a modern capitalist state, beginning to push aside the 
gigantic lumber of a semi-Asiatic feudalism, but in the war 
years between 1914 and 1917, and above all in the civil war years 
from 1917 to 1921, she necessarily regressed, in material assets, 
to a point much below even the humble level of 1914. The com- 
munist leaders would have been foolish visionaries if they had 
supposed that by some magical process a communist society 
could suddenly emerge from the flooded mines of the Don Bas 
or the dark and forsaken villages of central Russia. But they 
showed themselves to be men of incomparable resolution and 
marvellous historical insight when they determined that the 
smoking ruins which were bequeathed to them by the Russian 
imperialists did offer the possibility of a firmly established work- 
ing-class dictatorship ; and that such a dictatorship alone could 
rebuild Russia. With what dazzling audacity did Lenin conceive 
his project : with what colossal tenacity has Stalin clung to its 



THE NATURE OF COMMUNISM 855 

execution. The little group of Marxists who helped the Russian 
workers to build that indispensable instrument for the execu- 
tion of their class will, the Russian Communist party, are now 
passing one by one into history. And it is certain that history 
will record no parallel to the task which they attempted, and 
which their survivors and successors are now carrying forward, 
stage by stage, towards its completion. For they conceived the 
extraordinary project of laying the basis upon which a communist 
society would gradually grow up, by the same act with which 
they finally destroyed both the substantial remains of Russian 
feudalism and nascent Russian capitalism. 

There was an almost mad heroism in such a decision. For 
Lenin and his associates knew perfectly well the terrible handi- 
cap which the inadequate development of Russian capitalism 
imposed upon them. They had no illusion that Russia could 
painlessly leap over the fully developed capitalist stage. On the 
other hand, they were free of the preposterous, and in effect 
disingenuous, pedantry of Kautsky and the German Marxists 
who supposed that every country must pass through precisely 
the same stages of development : that it must tread the capi- 
talist path to some exactly determined point at which, and not 
a moment sooner or later, it would be correct for the working 
class to seize power. Lenin knew that history is not so accom- 
modating : that the working class must seize power when and 
where it can : that a combination of favourable circumstances 
such as took place in Russia in 1917 might not occur again any- 
where for decades. Thus, he determined that it would be crim- 
inal to neglect such an opportunity, though he knew perfectly 
well that the maintenance of working-class power and the 
progressive establishment of communism in Russia presented 
problems of extreme difficulty. That Lenin was perfectly aware 
of this is certain. For example, we find him writing, in 1920, 
that " it was easy for Russia, in the concrete, historically quite 
unique, situation of 1917, to begin a Social Revolution ; whereas 
to continue it and complete it will be more difficult for Russia 
than for other European countries." It is the tremendous 
achievement of the Communist party of the Soviet Union that 
the Russian Revolution has been continued and is, it is hardly 
too much to say, almost within sight of completion. 



856 THE COMING STRUGGLE FOR POWER 

For revolutions are not, as is sometimes erroneously supposed, 
events which occur on a particular day of a particular month of 
a particular year. It may be possible to fix, as in 1789, though 
always with some arbitrariness, a particular point in time at 
which they begin. But they take decades to complete. Thus it 
will not be possible to say that the Russian Revolution has been 
completed till a genuinely classless society has been achieved. 
Then and then only will it be possible for communism to begin 
to appear. 

What does exist in the Soviet Union to-day is a working-class 
dictatorship, solidly and powerfully engaged upon transforming 
the basis of society. The process is continuous. But there have 
been two decisive periods. The first was from 1917 to 1920 in 
which the working class seized power, destroyed the old State 
apparatus and created a new one of their own. The second 
critical period was from 1929 to 1931 when the last substantial 
class of persons who derived their income from the possession 
of the means of production, the class of rich peasants, was dis- 
possessed. Hence, the history of the Soviet Union affords an 
example of the power and achievements of a working-class 
dictatorship in transforming, in the face of the most adverse 
circumstances, the basis of the life of a community, rather than 
an example of communism in existence. But the Soviet Union 
does of course give us by far the best indications indeed the 
only concrete indications which we have of what communism 
will be like when it does come into existence. 

Communism is best regarded as a method by which human 
civilization can be maintained and developed. Communism is 
indeed the only method by which it can be maintained at all. 
For capitalist imperialism is in an evident and acute stage of 
disintegration, and would sooner or later, if left unchallenged, 
physically overwhelm civilization in a tornado of high explo- 
sives. It is this consideration which makes so pathetically irre- 
levant the protests of well-circumstanced intellectuals against 
the very real difficulties and ardours which must for many de- 
cades characterize a communist system. Western intellectuals 
are continually proving that communism would be unlikely to 
provide them with the economic advantages, the leisure, the 
physical and mental comforts, which, in one or two of the most 



THE NATURE OF COMMUNISM 857 

favoured empires of the world, they enjoy to-day. They are quite 
right. But to deduce from this fact that their interest (even on 
the most rigidly personal grounds) is to prevent the coining of 
communism, is as ill advised as it would have been for a pas- 
senger on the sinking Lusitania to have pointed out to a ship's 
officer, who offered him a place in a boat, that the deck-chair in 
whkh he was seated was much more comfortable. Communism 
offers no one of this generation a ticket to Utopia. But it does 
offer to intellectual workers of every kind the one road of escape 
out of a paralysing atmosphere of capitalist decay, into a social 
environment which will give a limitless stimulus to the achieve- 
ments of the mind of man. 

But communism does not offer itself to mankind as a sort of 
painless and patent cure for all the ills of the universe. The 
essential argument in its favour is rather that it is the one 
method by which human civilization can be maintained at alL 
It is true that some members of the western ruling class are so 
accustomed to the automatic benefits of a, for them, very per- 
fectly functioning civilization that they cannot even conceive of 
what barbarism is like. Hence they do not feel the necessity of 
maintaining civilization despite all its burdens. But for the 
workers, who are nearer to reality, the absolute necessity of 
maintaining civilization itself, even though they rightly feel 
that there is no necessity whatsoever for maintaining the present 
form of civilization, is manifest. And it is upon the foundation 
of working-class support that all future civilization must rest. 
The workers and they alone have untapped reserves of strength 
and vitality which can carry the race, through the crisis of the 
breakdown of capitalism, on to the new basis of a planned 
economy and a classless society. 

The coming of communism can alone render our problems 
soluble. A working-class dictatorship can alone open the way to 
communism. A working-class dictatorship can only be successful 
if the workers as a whole achieve a clear understanding of the 
historic destiny of their class. And this understanding, in turn, 
cannot be developed unless the working class succeeds in organ- 
izing its most conscious and clear-sighted members into that 
indispensable instrument of the workers' will, a Communist 
party. The assumption of power by the workers can occur by 



858 THE COMING STRUGGLE FOR POWER 

m&ans of revolution alone ; by means, that is, of an event which 
takes place over a limited number of years, and of which there 
may be a critical moment, such as the conquest of the existing 
State apparatus in a capital city, which can be " dated " to a 
given week of a given month of a given year. The coming of 
communism itself, however, after the achievement of working- 
class power, must be a gradual process. And it is only gradually, 
with the emergence of communism, with the creation and 
that, we may be sure, only by Herculean labours and painful 
sacrifices of the essential economic basis for a classless society, 
that the problems which to-day threaten civilization with 
eclipse will actually be solved. 

Nor, of course, will the coming of fully developed communism 
itself, solve all our problems. For example, the supreme enemy 
of man's complacency ; his knowledge of his own proximate 
annihilation by death, must long remain with him under any 
system of society. It would be foolish to deny, however, that 
communism by allowing of the maintenance and development of 
civilization, would progressively postpone the menace of death. 
As a matter of fact, even our present poor apology for civiliza- 
tion does now, and will do until it enters on its final holocaust of 
wars, push forward perceptibly the boundaries of life. For that 
small proportion of the population for whom capitalism does 
secure all the benefits of man's power over nature, for the ruling 
class, human life has already been much prolonged. In a society 
which was so organized as to give full possibilities to the develop- 
ment of science, a century or so of biological and medical re- 
search might enormously extend the average span of life. Nor, 
although our minds rebel against the conception to-day, is there 
any scientific necessity to suppose that in the end death could 
not be indefinitely postponed. 

One of the reasons, no doubt, why the conception of the in- 
definite postponement of death seems remote to us to-day is 
because, in the degenerating and hope-forsaken condition of 
the capitalist world, we are unable to imagine that men will need 
or desire a great extension of their lives. In the great cities 
of the capitalist world, in London, in Berlin, in Chicago, in 
Shanghai, capitalism both kills the workers' will to live and 
withholds the possibility of any but a short and disease-ridden 



THE NATURE OF COMMUNISM 859 

life. We need not doubt, however, that the achievement of a 
classless society will produce possibilities of life a level both of 
physical and psychological vitality such as to induce the 
workers systematically to seek for the extension of their life's 
span. Even to-day in the Soviet Union, during the very brunt of 
the initial struggles of a working-class dictatorship, before a 
classless society has fully emerged, there is perceptible an ex- 
hilaration of living which finds no parallel in the world. To 
travel from the capitalist world into Soviet territory is to pass 
from death to birth. Certainly death, until the final agony 
ensues, is the more peaceful, quieter and tidier process. " One 
must have all chaos within one to give birth to a dancing star," 
and, for those who cannot support the sight of a continent in 
labour, of the vast, baffling, contradictory stirrings of a young 
giant still half-cabined in the womb, the Soviet Union is an 
alarming place. We may leave such people to enjoy their tiny 
pleasures and comforts : for these will not long remain to them. 
They will find that in shrinking from the agony of birth they 
have chosen the agony of death. 



CHAPTER XX 
The Future of Great Britain 

IN this chapter, an attempt is made to exemplify the foregoing 
discussion of the nature of communism, by a sketch of the 
problems involved in the struggle of the workers to overthrow 
capitalism and establish communism in one particular state. 
The state selected must perforce be Great Britain, for lack of 
adequate first-hand knowledge of any other. The British position 
is of such crucial world importance, however, that our particular 
instance throws a good deal of light on the general rule. 

It is not proposed to attempt a discussion of the tactics appro- 
priate for a Communist party working in an old-established 
democracy such as Great Britain. The steady growth of the 
Communist parties of the West is clearly dependent upon the 
continued development of a tactic exactly appropriate to the 
conditions of those capitalist states in which the forms of 
democracy have been, hitherto, preserved. But such a tactic 
cannot, we may be sure, be worked out in paper propositions, 
however ingenious. It can only be evolved, and it is now being 
evolved, gradually and painfully as the result of the experiences 
of the Communist parties of the West, gathered in the course of 
long and obstinate struggles. Nor does the undoubted fact that 
the tactics of the class struggle must differ from place to place, 
indicate in the least that the fundamental antagonism of class 
interest is not everywhere the same. Moreover, nothing is more 
disgusting than to sneer or jeer at the efforts of the men and 
women who are engaged in finding the correct tactics for each 
particular set of conditions, at heavy cost to themselves and by 
the only possible method, the painful and laborious method of 
trial and error. 1 

1 Lenin wrote : 

** The problem, here " (in Britain that is) " as everywhere, consists in the 
ability to apply the general and fundamental principles of communism to the 
specific relations between classes and parties, to the specific conditions in the 
objective development towards communism conditions which are peculiar to 
every separate country, and which one must be able to study, understand, and 
point out. . . . 

44 The main thing now is that the communists of each country should, in 
ftill consciousness, study both the fundamental problems of the struggle with 



THE FUTURE OF GREAT BRITAIN 881 

All that is attempted here is a summary of the general posi- 
tion of Great Britain in respect of the need for, and prospects of, 
the communist movement. It may be worth while first of all to 
enumerate those, in themselves quite obvious, factors which 
make Great Britain a particularly favourable ground for 
communism. For these factors are, naturally, ignored whenever 
possible by British capitalist opinion. We will then come to a 
discussion of those objections to the possibility of communist 
success in Great Britain which we already hear so much of, and 
of which we shall hear to an ever-increasing extent. 

The principal factors which give a revolutionary working- 
class movement in Great Britain a basis of strength, unequalled 
anywhere else in the world are as follows : 

First : in actual numbers, the British working class is im- 
mensely strong. The proportion of the population of Great 
Britain which consists in industrial workers is higher than 
the corresponding proportion in any other important state. 
Britain is by far the oldest and is still the most heavily indus- 
trialized of all the great states. In America, for example, about 
a third of the population is still directly or indirectly on the land. 
Of the British population, something like four-fifths is industrial 
and commercial, hardly one-fifth agricultural. Even Germany, 

opportunism and * Left ' doctrinairism, and the specific peculiarities, which this 
struggle inevitably assumes in each separate country, according to the idiosyn- 
crasies of its politics, economics, culture, national composition (e.g., Ireland), 
its colonies, religious divisions, etc. Everywhere is felt an ever- widening and 
increasing dissatisfaction with the Second International, a dissatisfaction due 
to its opportunism and its incapacity to create a real leading centre, able to direct 
the international tactics of the revolutionary proletariat in the struggle for the 
world Soviet Republic. One must clearly realize that such a leading centre can, 
under no circumstances, be built after a single model, by a mechanical adjustment 
and equalization of the tactical rules of the struggle. The national and state 
differences, now existing between peoples and countries, will continue to exist 
for a very long time, even after the realization of the proletarian dictatorship on 
a world scale. Unity of international tactics in the communist labour movement 
everywhere demands, not the elimination of variety, not the abolition of the 
national peculiarities (this at the present moment is a foolish dream), but such 
an application of the fundamental principles of communism Soviet power and 
the Dictatorship of the Proletariatas will admit of the right modification of 
these principles, in their adaptation and application to national and national- 
State differences. The principal problem of this historical moment in which all 
advanced (and not only the advanced) countries now find themselves lies here ; 
that specific national peculiarities must be studied, ascertained, and grasped 
before concrete attempts are made in any country to solve the aspects of the 
single international problem, to overcome opportunism and Left doctrinairism 
within the working-class movement, to overthrow the bourgeoisie, and to institute 
a Soviet Republic and proletarian dictatorship " (Lefl Wing Commtmtm). 



862 THE COMING STRUGGLE FOR POWER 

'which is also heavily industrialized can show no nearly corres- 
* ponding proportion. Nor is it necessary to emphasize the car- 
dinal importance of this fact in estimating the possibility of the 
working class being able to establish their dictatorship in 
Britain. For it is always upon the urban industrial workers that 
the whole body of wage-earners must rely. The industrial workers 
alone can play the leading part in the revolt of all non-property- 
owning sections of the population. 

Second : the level of technical and educational development 
of this enormous British industrial working class is very high, 
relatively to that of the working class of other capitalist states. 
The British workers, as they have shown, by their unparalleled 
practical achievements in building trade unions and a Social 
Democratic party, have unrivalled powers of organization. And 
there is no reason to suppose that they will not exhibit those 
powers in the building of a Communist party. 

Third : the converse of the extreme industrialization of 
Britain is, of course, the smallness and unimportance of her 
agricultural population. Now the comparative insignificance of 
British agriculture is usually quoted as one of the greatest 
objections to the maintenance of a communist regime in Britain. 
We shall consider this objection in a moment. It is obvious, 
however, that the absence of any large class of agriculturalists, 
owning their means of production, and living by operating them 
themselves, is an enormous initial advantage to the British 
communist movement. For such a class is necessarily conserva- 
tive, and will almost always ally itself to the big capitalists. We 
may recall the part which the farmers and richer peasants have 
played in Europe, and which they have sought to play in 
Russia. They have proved everywhere the readiest instruments - 
of the big capitalists, when these determined that the time had 
come to resort to methods of open violence in order to smash all 
working-class organizations. How great then is the advantage 
of the British workers in the fact that this agricultural class is in 
Britain comparatively insignificant in numbers. 

Fourth : what agricultural interests do exist are sharply 
divided into two antagonistic classes. For it is the unique 
characteristic of British agriculture that it has not developed 
a system of small holdings, and consequently a peasant class. On 



THE FUTURE OP GREAT BRITAIN 868 

the contrary, British agriculture at an early stage in its develop- 
ment created units of production, farms, that is, too big to be 
worked by a single family. Hence, there grew up a relatively 
large class of wage-earning agricultural labourers, landless 
workers, as bereft as any urban proletarian of the means of pro- 
duction. And the agricultural workers, to the number of some 
800,000 are a genuine rural working class. It is true that they are 
to-day on the whole backward, intimidated by the farmers and 
landlords and an easy prey for the old capitalist parties. British 
social democracy has never been able to secure their votes. (Not 
that this is necessarily a sign of their backwardness.) But every- 
one who knows anything of the British agricultural workers 
agrees that, ill paid, and still suffering all those petty oppres- 
sions characteristic of the exploitation of small masters, they 
have intense, if latent, class antagonisms. Nor must all, at any 
rate, of the smaller tenant farmers be placed on the side of 
reaction. The " direct action " which the British farmers have 
lately taken by the refusal of many of them to pay tithes for the 
upkeep of the State Church shows that under the pressure of 
economic circumstances they can become a force hostile to the 
capitalist State. Hence, even that rural population which does 
exist in Britain is by no means a unitedly anti-working-class 
force. The agricultural workers in a time of crisis could certainly 
be relied upon by the urban workers, at least to neutralize the 
efforts on behalf of the capitalists of the farmers and landlords. 
Thus, the intrinsic balance of class forces is certainly more 
favourable to the workers in Great Britain than in any other 
major capitalist state. Nor is this truth ignored by the leaders of 
the British ruling class. Behind all their endless talk of the im- 
possibility of communism in England, of the special immunity of 
the good, honest, British workers from the communist microbe, 
there lurks the " anxiety neurosis " of men who know that their 
position is especially insecure. And just occasionally, in mo- 
ments of special tension, the anxiety of the most intelligent and 
best informed leaders of the British capitalist class secures con- 
scious expression. There is, for example, that well-known passage 
in one of Mr. Lloyd George's speeches in 1920, a passage which 
drew from Lenin the comment that Mr. Lloyd George was " not 
only a very clever man, but that he has learnt much from the 



864 THE COMING STRUGGLE FOR POWER 

Marxists." Mr. Lloyd George was arguing in favour of the 
necessity of his coalition of all the forces of the capitalist class 
into the then existing " National Government." Such a coalition 
was necessary, he told his audience, in order to combat the 
communist menace. 

" If you go to the agricultural areas," he said, " I agree that 
you have the old party divisions as strong as ever ; they are 
far removed from the danger. It does not walk in their lanes. 
But when they see it they will be as strong as some of these 
industrial constituencies now are. Four-fifths of this country 
is industrial and commercial ; hardly one-fifth is agricultural. 
It is one of the things I have constantly in my mind when I 
think of the dangers of the future here. In France the popula- 
tion is agricultural, and you have a solid body of opinion 
which does not move very rapidly, and which is not easily 
excitecl by revolutionary movements. That is not the case 
here. This country is more top-heavy than any country in the 
world, and if it begins to rock, the crash here, for that reason, 
will be greater than in any other land." 

We have already discussed the intrinsic assets and liabilities 
of the British capitalist position. (For, of course, the British 
workers are not either absolutely weak or strong ; they are weak 
or strong relatively to the strength or weakness of the British 
capitalist class.) We concluded that while immediately the 
British capitalists had very great in some respects unrivalled 
remaining strength, yet their world position was foredoomed 
to decline. We saw that the wisest and most successful of their 
leaders realized this, and that all their efforts were directed to 
mitigating Britain's decline : that they realized, whether con- 
sciously or unconsciously, that any strong action taken with a 
view to a permanent and decisive restoration of the British 
position necessarily involved war with some other empire ; 
and that such a war held but the darkest prospects for Britain. 
But such considerations, although they are themselves decisive 
in the long run, do not necessarily help us much in estimating 
the balance of class forces which may be expected to arise in 
Britain in the near future. 



THE FUTURE OP GREAT BRITAIN 865 

Let us next attempt to estimate the assets possessed by the 
British workers during that critical period which must super- 
vene immediately after the establishment of their dictatorship. 
The factors which we have hitherto considered are assets only 
from the point of view of the possibility of the attainment of 
working-class power. It is one thing, however, for the workers 
to take power and another for them to be able permanently to 
maintain it. Nevertheless it will, on examination, become 
apparent that the British workers have important assets for this 
second period. We may summarize these assets as follows. 

First : that same generally high level of technical skill, educa- 
tional standards, and political experience which we noticed as 
forming an important asset for the building up of a communist 
movement in Britain, as objective circumstances become more 
and more favourable, is an asset of even greater importance for 
the maintenance of working-class power, once it has been 
achieved.- No one who has seen the immense difficulties which the 
Soviet Union has faced in consequence of the backward state of 
development which Tsardom had imposed upon the Russian 
workers, can doubt that the task of laying the foundations of a 
communist economy in Great Britain would be immeasurably 
simpler, chiefly on account of this particular factor. The British 
workers are probably the most generally capable in the world : 
they will be far less dependent than are the Russians upon 
middle-class technicians, some of whom may be unreliable, for 
the maintenance and development of their economic system. 
(It may well be expected, however, that a much larger propor- 
tion of British technicians, with the example of the scope for 
technical ability which the Soviet system gives, will rally to a 
working-class regime.) It is probably not too much to say that 
the British workers are capable themselves of running the British 
productive system. Nor is it merely a question of technical skill. 
Several generations of industrial experience undoubtedly give a 
reliability, a sense of order, a power of co-operation for large-scale 
production which the Russian workers, outside Leningrad and 
one or two other exceptional places, necessarily lacked. 

Second : the geographical nature of Great Britain makes her 
an, ideal country to which to apply the principles of a planned 
centralized economy. Her geographical area is so small, and her 



806 THE COMING STRUGGLE FOR POWER 

system of communications so complete that the problems of 
centralized control will be greatly simplified. Britain is the most 
compact large-scale productive unit in the world. Her industries 
have been brought by capitalism to the point where they simply 
cry out for unified control. Nor will there be in Britain anything 
like the difficulty in generalizing the organizing committee or 
council of each industry into a nation-wide planning commission, 
which existed in Russia. 

Third : moreover, the actual quality and quantity of the tech- 
nical equipment of Great Britain (though some of it is now begin- 
ning physically to deteriorate) is perhaps unparalleled anywhere 
in the world. Think for a moment of the transport facilities of 
Great Britain perhaps the most important single factor in the 
economic life of a nation. Great Britain has a double system of 
inland transport, by rail, and road, each of which is perhaps 
comparable to the very best of the systems of any other country. 
Her railway system throws a close mesh over the country, and 
is still on the whole better maintained than are the railways of 
any other area (though the Ruhr area of Germany and parts of 
Belgium and Luxemburg have an even closer mesh of railway 
lines). Her roads, though not nearly so well designed as those of 
France, are better maintained and, again, have a closer mesh. 
Moreover, they are equipped not only with an immense fleet of 
lorries for the transport of all kinds of goods, but with a very 
large number of passenger coaches or omnibuses. It is true that 
some parts of Britain's inland canal system, once one of the 
finest in the world, have been allowed to fall into decay. But the 
system would be restored very easily and cheaply if it were not 
considered redundant. It is probably not too much to say that 
either the road or the railways system of Great Britain could 
independently, and in the impossible event of the other being 
totally destroyed, carry on quite effectively the entire transport 
services of the community. The roads could certainly do so if 
they were supplemented by the extremely cheap transport of 
heavy raw materials, which is possible by canal. In addition, 
however, to these incomparable forms of inland transport 
probably the best method of all for British bulk transport is by 
coastal steamer. For it is an important and often neglected 
economic fact that something like two-thirds of the population 



THE FUTURE OP GREAT BRITAIN 867 

of Britain lives in seaport towns in areas which can be reached 
by ocean-going ships. 1 It is only necessary to compare these trans- 
port facilities, now so squandered by capitalism, with the meagre 
resources inherited by the Russian workers, to understand the 
advantages which a British workers' dictatorship would possess. 
And the remarkably high development of the British transport 
system is only an instance of the general development of British 
capital equipment. For example, another source of immense 
strength to a workers' dictatorship in Britain will be the un- 
equalled development of the British machine-building industries. 
Britain can produce machinery of all sorts, and above all machine 
tools, the machines for making machines, better than any 
country in the world. Thus, damage to existing plant, or its 
obsolescence, are factors which can be eliminated with unex- 
ampled ease in Britain. 

In some respects certain British industries, it is true, lag 
behind the best German, French, American, and now Russian, 
practice. For example, British blast furnaces are mostly of 
small capacity ; the surface equipment of her coal mines is in- 
adequate ; her motor-car industry is largely carried on by 
firms too small to apply all the advantages of mass production. 
A good deal of the equipment of the Lancashire cotton industry 
needs replacement. But on the whole British industrial equip- 
ment is probably as good as any in the world. For if it has many 
defects, so have the equipment of all other capitalist states. 
Certainly it represents a productive power which, if operated 
steadily, and at full capacity, as it would be operated by a 
working-class dictatorship, could, even without extension, pro- 
duce a standard of life for the British population at present 
unrivalled in the whole world. For it is not any lack of the 
technical ability to produce which is to-day progressively bring- 
ing British industry to a standstill. It is that the existing 
social relationships, the impasse which British capitalism has 
reached, make it impossible to utilize her admirable productive 
equipment. 

The fourth factor which would facilitate the task of main- 
taining and consolidating a working-class dictatorship in Britain 

1 Manchester and the neighbouring Lancastrian towns fall into this category 
since the building of the Manchester ship 



868 THE COMING STRUGGLE FOR POWER 

(for a period sufficiently long, firmly to lay the foundations of 
communism) is the unrivalled inheritance of what one may call 
44 cultural " and " amenity " equipment which will accrue to 
the British workers. For example, Britain has, on the whole, an 
extensive system of school buildings and general educational 
equipment 1 : her public utility services are well developed : she 
has the nucleus of a comprehensive system of free lending 
libraries : a network of cinemas : a large number of wireless re- 
ceiving sets and excellent transmitting stations. Again, there 
exist in London the largest and finest plant in the world for the 
production and distribution of daily newspapers on a vast scale. 
(It is sometimes forgotten that the big London dailies, because 
of their national distribution, have much larger circulations 
than any American newspapers. This is another instance of the 
advantages of the compactness of Britain.) It is, of course, quite 
impossible for the British working class to make use of these 
assets to even 1% of their possible value in existing conditions. 
It is true that in another respect a British working-class 
dictatorship will be seriously handicapped. The housing condi- 
tions which it will inherit are abominable. It is not too much to 
say that one of the most urgent tasks of a working-class dic- 
tatorship in Britain will be the rebuilding of whole areas of every 
city in the land. On the whole, however, the British workers 
will find themselves, once they have attained power, in an in- 
comparably better material position than did the Russian 
workers. They will be able at once to devote a much higher 
proportion of their energies to the production of consumable 
goods, as distinct from capital goods, than could the Russians. 
They will be able to satisfy all the basic wants of the population 
at a much earlier stage. It is not too much to say that while the 
primary problem in Russia has been to construct the basic 
equipment necessary to a communist civilization, in Great 
Britain the workers' first task will be the adaptation of a rich 
inheritance to new uses. 

All the foregoing considerations, however, apply to the situa- 
tion of a workers' dictatorship in Great Britain regarded in 

1 Compared to what they might and ought to be, British schools axe pitiable * 
compared to what the Russians inherited in 1917, they are superb. 



THE FUTURE OF GREAT BRITAIN 869 

isolation. Such a view is highly abstract. A workers 9 dictator- 
ship in Great Britain could, in fact, only be, as we show 
below, a part of a widespread working-class assumption of 
power extending to considerable areas of Europe at least. It 
may be best, however, to discuss this subject, which raises the 
real prospects of communism in Britain, by coming to a discus- 
sion of the principal objections to the possibility of communist 
success which are always raised in British capitalist and social 
democratic circles. 

The first of these objections represents the other aspect of the 
undoubted fact, which we have already discussed, that Britain/ 
is a highly industrial country in which agricultural production^ 
plays a relatively small part in the national economy. This fact 
is expressed by the oft-repeated cry of the-spokesmen of British 
capitalism, a cry which, as the power of communism grows, will 
rise into an almost deafening shriek, that " Britain cannot feed 
herself." From determined fascists, bewildered liberals, and 
socialists finding excuses for the abandonment of socialism, this 
cry already resounds. It is impossible, unthinkable, mad, out- 
rageous, we are told, for the British workers even to dream of 
taking power. For if they did so, Britain would starve in a few 
weeks. The capitalist countries would boycott us. We could not 
buy our food. We should all perish miserably. Every shade of 
opinion within British capitalism, from the Churchills on the 
Right to the disaffiliated pacifists of the I.L.P. on the Left, feel 
that with these magic words they have laid the communist 
spectre. What further need have we of witnesses ? " Britain 
cannot feed herself " and oh what a relief that settles the 
matter. 1 

What importance have we to attach to this question? On 
examination, the whole thing boils down to one simple proposi- 
tion : viz. that a working class regime in Britain must be part of 
an international movement. And whoever dreamt of it being 
anything else ? Is it not precisely because communism is in its 

1 Thus Professor Harold Laski, in his well-known little book entitled Com- 
munism, tells us that " the rupture of Anglo-American trade would be fatal to 
an English revolution." But Professor Laski's fears and anxieties lead him to 
stranger statements still. We are told, for instance, that " an American com- 
munist revolution would have to cope with problems of distance which would 
probably render it abortive at a very early stage." What luck for Lenin that he 
bad to deal with a handy little pocket handkerchief of a country like Russia 1 

ZP 



870 THE COMING STRUGGLE FOR POWER 

very essence international : because it is a movement which 
can recognize no frontiers of race, of colour, or of territory, that 
all the Communist parties of the world are tightly bound together 
into the Third International ? It might be impossible to main- 
tain a workers' dictatorship in Britain against a united capitalist 
world. Already, however, such a world does not exist. Capitalism 
has lost control of Russia. Moreover, the remaining capitalist 
powers are at daggers drawn with each other, so that they have 
never yet been able to combine even against the Soviet Union. 
This does not mean that the problem of securing regular and 
uninterrupted supplies of raw materials and foodstuffs to a 
Britain in which the workers had taken power would not be an 
important one. (Incidentally a tremendous lot of nonsense is 
talked about the actual quantity of food produced in Britain. 
Taking one type of foodstuff with another, Britain produces 
about a five months' supply annually. And she habitually carries 
a stock of food adequate to last from two to three months.) 
But it would not be an impossible task, even in the case of 
Russia and Britain being the only two communist areas in an 
otherwise capitalist world. But is such a case likely to arise? 
It is improbable that Britain will be the next place in which, 
after Russia, the conflict of class comes to the point of decision. 
As a matter of fact, history will probably record that the 
Kwangsi province of China was the first area of the world after 
Russia, in which a stable workers' Government was set up. 
For already (March 1931) some sixty million Chinese, according 
to the Shanghai correspondent of the London Times (who is 
not a communist sympathizer) are living under the rule of 
Soviets. Again, there are half a dozen points in Europe in which 
the capitalist crisis is more acute, and, naturally therefore, the 
communist movement is more developed, than it is in Britain. 
The workers will probably obtain power in Poland or Roumania 
or Spain or Hungary or Austria or Germany, for example, 
before they do so in Britain. And the overthrow of capitalism 
in one or more of these countries would immediately transform 
the international balance of power. Thus the whole picture of a 
communist Britain surrounded by a ring of hostile capitalist 
powers is a preposterously unreal one. It is a picture which 
could only be found convincing by people whose desires and 



THE FUTURE OF GREAT* BRITAIN 871 

fears combined to allow them to cherish any illusion which 
helped them to believe that communism in Britain was 
impossible. 

One other form of this objection is sometimes raised. It is 
suggested that even though it is extremely probable that a com- 
munist Britain will not arise until most of the rest of Europe 
is also in the hands of the workers, and is thus in a position to 
form, with Russia, a self-supporting unit, the British Navy 
would be used by the British capitalists to blockade the coasts 
of Britain, prevent food supplies from reaching her, and so 
either starve to death the population of her great cities, or, if 
necessary, bombard them into submission. It is probable that 
less will be heard of this objection after the revelation of the 
true spirit of the British sailors at Invergordon in the autumn 
of 1931. It is quite clear that it would be utterly impossible to 
order British seamen to intercept food ships bound for British 
ports and so starve to death their own countrymen, including 
their own wives and children. Still less could they be induced to 
lay waste British coastal cities by bombardment. 1 

As a matter of fact, the real and urgent task which faces 
the revolutionary movement in Britain is to keep up with the 
forward surge of development which Communist parties the 
world over are experiencing as a result of the present crisis 
(1932) in capitalism. There is visible no danger of the British 
workers making such rapid progress as to become, materially 
or psychologically, ready to take power before the workers 
elsewhere are able to give them such assistance as will secure 

1 The theorists of the British Independent Labour Party now use simple and 
direct appeals to funk as their chief anti-revolutionary propaganda. They tell us 
that revolution is now utterly impossible because of the nature of modern arma- 
ments. Thus a speaker at a 1932 I.L.P. Summer School told his audience that 
revolution was for ever impossible in Great Britain because power was now con- 
centrated in the hands of the air force. And the air force could easily bomb 
*' camps of the unemployed " out of existence. Why, in a revolutionary situation, 
the unemployed should go camping was not explained. And in the case of the 
bombing of cities, it may be asked how the pilots of the air force are to pick out 
revolutionaries as their targets from a height of ten thousand feet. 

Actually modern developments in the technique of warfare have probably not 
affected the balance of class forces one way or the other. It is quite true that 
to-day no workers* revolution can hope to succeed unless it receives the aid of the 
workers in the armed forces of the State. But then this has been true for the last 
two hundred years, at least. The most cursory examination of all previous 
revolutions will show that their success has always been due to the dis 
of the workers in the ranks of the armed forces of the established order ^ 



872 THE COMING STRUGGLE FOR POWER 

for them supplies essential to the maintenance of their power. 
This is not in any way to reflect on the intelligence and courage 
of the British workers, which will, we may be confident, in the 
end prove to be second to none. It is not to subscribe by implica- 
tion to any absurd doctrine of there being an inherent incom- 
patibility between communism and the psychology of Britons. 
It is merely another way of repeating that the crisis in capitalism 
is as yet less grave in Britain than it is in many other parts of 
the world. When the British workers find themselves at last 
face to face with the same inescapable realities which, for ex- 
ample, the German workers are beginning to face to-day, they 
will, it is safe to prophesy, show themselves not less, but (because 
of their high level of development) more ready and active to 
take the road of their salvation. In the meanwhile, during the 
period when the vast remaining resources of British imperialism 
still make Britain one of the strongest links in the capitalist 
chain, the task of British workers is not to worry as to what 
would happen in the quite impossible event of their getting 
power before the workers of Europe were in a position to prevent 
their destruction by a vengeful world capitalism. Their task is 
to see to it, by every means in their power, that they are strong 
enough to prevent British capitalism from destroying those 
workers' dictatorships which will certainly be established else- 
where in the coming years. Nor indeed is this a question of the 
future. It is an urgently necessary task of to-day for which it 
is essential to mobilize the whole strength of the British working 
class. At this present moment, British capitalism is helping, as 
actively as its jealousy of Japan, its bickerings with France, 
and its fear of America will allow it, to suppress the Chinese 
Soviets, and to egg on Japan to attack the Soviet Union. To 
hamper and if possible to prevent action of this sort is an im- 
mediate task for the British workers. They must see to it by 
their present efforts that when the time for them to take power 
does come, there will be workers' Governments puissant to aid 
them both in Asia and in Europe. 

The second great objection to the possibility of communist 
success, and this objection is raised not only by the British 
capitalist class, but by the capitalist classes of all the Western 
powers, is that in contradistinction to Russia, the^cagitalist x 



THE FUTURE OF GREAT BRITAIN 878 

classes of the West are so overwhelmingly strong in numbera, 
wealth, intelligence, skill, and power of organization, that the 
workers have no chance against them. Let us consider these 
supposed qualities of our capitalist classes. They are said to be, 
compared to the Russian capitalist class, extremely numerous. 
This is undeniable. But then the working class of the Western 
powers is also, compared to the Russian working class in 1917, 
extremely numerous. As a matter of fact, the proportion between 
the two classes is probably just about the same in the two areas. 
And, needless to say, it is the proportion alone which is relevant 
to the argument. 

Again, we are told that the Western capitalist classes are far 
richer than was the Russian. Hence, they can command vastly 
greater resources both of propaganda and of intimidation ; 
moreover, they can make expensive concessions to the workers 
if they ever find themselves temporarily in a tight place. In the 
first place, this difference of the greater wealth, and therefore 
power, of the capitalist classes of the West compared to the same 
classes in pre-1917 Russia, applies to their respective working 
classes to an equal degree. The Western workers, also, can com- 
mand resources by reason of their universal literacy for ex- 
ample which were totally closed to the Russians. It may be 
objected with some force, however, that this factor at any rate 
is not merely a question of the relative strength and wealth of the 
two classes. For while the wealth of the capitalist classes of the 
Western states increases their strength for the purposes of class 
conflict in direct ratio, the higher standards of the Western 
working classes, as compared to the Russian workers in 1917, 
may weaken if not their strength, at any rate their will for the 
same purpose. Hence, while it is quite unreal to suggest that the 
higher standards of both of the opposed classes in the West is an 
absolute gain to the capitalist class yet it may be agreed that it 
has on this account some net gain. And in fact that the workers 
have usually been able to take power at times and places where 
the material strength of both sides has been low : while capitalism 
has been strongest where the standard of life both of the workers 
and capitalist class has been high. An important qualification 
immediately arises, however. The worker's urge to struggle is 
not so much a question of aqy absolute standard of life, as of 



874 THE COMING STRUGGLE FOR POWER 

sudden changes in his standard. A sudden drop in the worker's 
standard of life is naturally always accompanied by a sharp 
increase of class antagonism : interestingly enough, however, a 
sudden increase of standards more especially in the case of the 
increase being due, not to a rise in wage-rates, but to a tem- 
porary absorption of the unemployed into industry (owing to a 
war, let us say) may also increase class antagonism. And this 
latter case, which can be easily substantiated historically (cf. 
conditions in the last stages of the war in Great Britain and for 
that matter in Russia) shows clearly the limited character of the 
advantage to the capitalist class of a high standard of life for 
the working class. 

But the main criticism of the claim that the Western capitalist 
class is unassailably strong, even if we discount the foregoing 
qualifications altogether, is that its strength and wealth is 
visibly, obviously, and now rapidly, declining. Again of course, 
this process has not gone anything Hke so far in Great Britain as 
in Germany or Central Europe, for example. But one has only to 
compare either the income or the capital possessed to-day by the 
capitalist class of all the capitalist states, with what it pos- 
sessed as lately as 1929, to realize the magnitude of the fall. We 
shall be told no doubt that this is only temporary : that the 
slump will soon be over and that then everything will be normal 
again. Well, that may, or may not, be true. It is quite possible 
that the present conditions of acute crisis will pass : for if they 
do not, then in the opinion of leading capitalist authorities, from 
the Governor of the Bank of England downwards, world 
capitalism will cause such appalling misery to the workers as to 
produce immediate and decisive revolt. 1 Let us suppose for a 
moment that the best hopes of the capitalist world are realized, 
and that the present crisis is overcome. Even in that event, it 
seems most unlikely that any boom comparable in magnitude, 
duration or stability to the period 1924-1929 will recur. The 
1924-1929 boom itself was far less general, secure and vigorous 
than were the great pre-war booms of the heyday of capitalism. 

* Mr. Montagu Norman, the Governor of the Bank of England, in one of his 
more dramatic moments, prophesied that this would happen. His remark, how- 
ever, was probably only made in an effort to impress the Americans and the 
French, in order to induce them to do what he told them. 



THE FUTURE OF GREAT BRITAIN 875 

(In fact, in Great Britain, it was considered to be merely the 
mitigation of permanent depression.) In the same way it seems 
clear, from the amount of permanent and irreparable damage 
that this slump has already done to world capitalism, from the 
extent to which it has forced all the great states to disrupt the 
world free market, and from the degree to which it has sharpened 
imperialist antagonisms, that the next boom period, if it comes, 
will be comparatively short, patchy, hectic and unstable. In 
general, one may venture to prophesy that with the pro- 
gressive break up of a unified world market, possessing a unified 
currency based on gold, or any other objective standard, the 
quality of " patchiness " in capitalist booms will become 
especially pronounced. Thus, we are probably entering a period 
in which, say, Great Britain will be enjoying a boom and, say, 
America will be in deep depression (or vice versa), while, in a 
third country, capitalism will have so disintegrated as to have 
driven the workers to take power. And not only will future 
booms, if any, be patchy as between country and country : they 
will be patchy as between industry and industry in the same 
country. To demonstrate the gross intensification of the political 
instability of world capitalism which such conditions will pro- 
duce would be to recapitulate the main argument of preceding 
chapters. It is clear that such conditions will create, on the one 
hand, the greatest possible disproportions between different 
branches of production, leading to world-wide economic catas- 
trophes which ^ill make the present (1931-193?) slump look 



like a period of stable prosperity : and, on the other hand, will 
vastly exacerbate every imperialist antagonism and so speed up 
the coming of war. Moreover, the efforts at readjustment which 
capitalism will be forced to attempt in order to overcome these 
more violent crises must themselves become more and more 
violent. Unheard-of wage-cuts, the wholesale abolition of social 
services, the iron repression of mass agitation, desperate at- 
tempts to crush the resistance of colonial peoples to intensified 
exploitation, will become the order of the day. In general, then, 
we may say that while there may be further periods of capitalist 
boom, they will have the characteristics which the philosopher 
Hobbes attributed to the life of primitive man they will be 
nasty, brutish and short* 



8T6 THE CX)MING STRUGGLE FOR POWER 

There does not seem to be room for doubt that, neglecting 
the periodic ups and downs of the trade cycle, the whole trend 
of the wealth, and consequently the strength, of the capitalist 
classes of the West is steeply downwards. Although it may be 
true that they are, in certain exceptionally favoured spots, 
such as Great Britain, still too strong to be overthrown by the 
workers, they will not long remain so. For the ruling classes of 
the West to pin their hopes of defeating the workers upon the 
fact that their wealth is incomparably greater than that of the 
Russian ruling class in 1917, is to rely on a wasting asset. Truly, 
the workers are not likely to achieve power in those places where 
the capitalist class is still very rich and strong : but then in one 
country after another the capitalist class is becoming progres- 
sively poorer and weaker. 

There is one further factor which qualifies the power of the 
capitalist classes of the West. Their internal unity is by no 
means complete. What these classes now need for their self- 
preservation is an iron conservatism. But some sections of 
these classes, the intelligentsia and salariat in particular, have 
long traditions of liberalism. These sections of the capitalist 
class are unfitted to enter upon the policy of repressive violence, 
which their class interest now urgently requires. It is true that 
up to a point these individuals unconsciously play a part very 
useful to the main mass of capitalist conservatism. For the pro- 
paganda of liberal, pacifist and equalitarian ideas, which they 
maintain, serves to cover up the otherwise naked reaction of the 
policy of all capitalist Governments to-day. 

As, however, the situation grows more desperate, such a 
smoke-screen of liberalism may well become more of an embar- 
rassment than an assistance to the governing class. For it ham- 
pers that freedom of swift and ruthless action which a hard- 
pressed class requires. Then dawns the day of what we have 
called the advocates of action the Mussolinis, the Churchills 
and the Hitlers. The " liberal-minded statesmen," the " en- 
lightened intellectuals/' the whole paraphernalia of constitu- 
tionalism, are bundled off the stage. It is at this point, when 
the final struggle approaches, when the economic situation has 
become desperate beyond anything which we in Great Britain 
have guessed at, that the Western capitalist class will begin 



THE FUTURE OF GREAT BRITAIN 877 

seriously to lose its cohesion. Some of those sections which 
possess long liberal traditions will simply oppose the new f ascistic 
methods, without facing the fact that the only alternative to 
their employment is a surrender of power to a working class 
dictatorship. Such liberal opposition may to a significant ex- 
tent, hamper the forces of the capitalist class. Another and 
much smaller section of the ruling class, faced at last with in- 
escapable choice, will break away entirely and throw in their 
lot with the working class. Marx defined this process very 
clearly, as early as 1848. 

" Finally," he wrote, " when the class war is about to be 
fought to a finish, disintegration of the ruling class and the 
old order of society becomes so active, so acute, that a small 
part of the ruling class breaks away to make common cause 
with the revolutionary class, the class which holds the future 
in its hands. Just as in former days, part of the nobility went 
over to the bourgeoisie, so now part of the bourgeoisie goes 
over to the proletariat. Especially does this happen in the 
case of some of the bourgeois ideologues, who have achieved 
a theoretical understanding of the historical movement as a 
whole." 1 

(Incidentally, the last sentence of Marx sums up almost the whole 
duty of the honest intellectual of to-dny. His duty is to master 
" the historical movement as a whole." If he does so he can 
have no possible doubt as to the necessity of throwing in his 
lot with the workers.) 

The third " fatal " objection to the success of communism 
in Britain is, we are told, the " psychology " .of the British 
workers. Stripped of a mass of quite meaningless nonsense 
about " the national psychology," this objection is an appeal to 
the fact and it is a fact that sections of the British workers 
have been strongly infected with a capitalist point of view. 
(There is nothing in the least peculiar to Britain about this 
phenomenon: it has occurred in America, in Holland, in Sweden, 
wherever, in fact, capitalism has been until quite recently fairly 
successful and prosperous. And the capitalist classes of such 

1 The Communist Manifesto. 



878 THE COMING STRUGGLE FOR POWER 

countries have solemnly assured themselves that " their " 
workers their good-hearted, British, Dutch, Swedish or Ameri- 
can workers have a heaven-sent immunity from the communist 
bacillus.) Now this third objection is obviously consequential 
upon the second. The permeation of strata of the British workers 
by a capitalist point of view is simply an expression of the wealth 
and strength which the British capitalists have hitherto enjoyed. 
And it is clear that if this wealth declines, so also will its former 
owners hold upon the workers' minds. It is worth while, however, 
to examine the basis of the present degree of capitalist control 
over the workers' psychology. The permeation of the workers by 
capitalist ideas is effected in several ways. The essential basis is 
an ability to give to some sections of the workers a taste of 
middle-class economic security and sufficiency. American capit- 
alism probably did this in the years between 1923 and 1929 to 
the greatest extent. A locomotive engineer (or as we in Britain 
would say an engine driver) on, say, the Pennsylvania Railroad, 
a plumber, or any building trade craftsman in New York City, 
really did in those years enjoy the standard of living of a dis- 
tinctly successful retail tradesman in Great Britain. 

Moreover, at an earlier stage, American capitalism was 
unrivalled at providing the second instrument for promoting 
a capitalist point of view amongst the workers : it actually did 
offer a certain significant number of opportunities for the 
workers to make money, leave their class and become fully 
fledged American property-owners, living by virtue of their 
ownership of the means of production. But although American 
capitalism exhibited both these characteristics to an unrivalled 
degree, it never exhibited them for so long a period or so con- 
sistently as did British capitalism. The British railway engine 
driver may never have owned a motor-car ; but he may have 
been in the apparently secure possession of the basic necessities 
of middle-class comfort a satisfactory house, ample food, good 
clothes, some pocket-money for the whole of his life and he 
may remember that his father, who was also an engine driver 
before him, had the same good fortune. In other words, British 
capitalism by reason of the immense super-profits of its empire 
was able to maintain in comparative comfort a u labour 
aristocracy " of skilled workers for several generations. And in 



THE FUTURE OF GREAT BRITAIN 879 

its earlier period, it provided enough examples of workers rising 
into the ranks of the property-owning class seriously to affect 
the minds of the whole working class. Moreover, British capit- 
alism kept up until very recently yet another method by which 
the most active and intelligent workers were systematically 
u declassed." It possessed a comparatively well-developed 
educational ladder, by which the cleverest sons of workers could 
climb to a higher education by means of scholarships, and then be 
absorbed into administrative posts (the Civil Service) or become 
teachers or technicians. The rungs of this ladder are now being 
cut away, however, by the educational axe. Moreover, the num- 
ber of administrative and technical posts open to this class of 
candidate is now rapidly decreasing, with the contraction of 
British industry and the difficulties of British imperialism, in- 
volving the surrender of administrative posts to the native 
middle class. These characteristics of a given capitalism are the 
indispensable basis for a capitalist point of view amongst sec- 
tions of the workers : but upon this basis the ruling class seeks 
to build a whole variety of institutions designed to confirm and 
spread its ideas. The same wealth which allows the capitalists 
to maintain a labour aristocracy in comfort enables them to 
organize all sorts of institutions for controlling the minds of the 
rest of the working class. Thus a whole section of the Press grows 
up, the function of which is to cater for the tastes and aspirations 
of the slum workers, tastes which capitalism itself has so brutally 
restricted. Every form of gambling in Britain predominantly 
betting on horse-racing is organized on the scale of a national 
industry : or, for unfortunate workers of more earnest tastes, 
" missions " of all sorts, religious, educational, and charitable 
are sent down to the slums : and now the great twin weapons 
of the cinema and the wireless are unsparingly used. 

In general, we may conclude that these efforts at the per- 
meation of the workers will not lack some success, so long as 
the capitalist class which is using them remains rich and power- 
ful. But so soon as its wealth declines, so must its ability to 
maintain these mental controls over its workers. In the end, 
therefore, this third " fatal objection " to the success of com- 
munism in Britain, or in any of the Western capitalist States, 
boils down to a repetition of the fact that Western capitalism 



880 THE COMING STRUGGLE FOR POWER 

will not be overthrown so long as it remains rich, strong and 
successful. Let us admit this most readily. For the whole point 
at issue is the question of whether it is in fact possible for these 
national capitalisms to remain rich, strong and successful. The 
first half of this book was devoted to a demonstration which 
(it is submitted) drove us to the conclusion that the national 
capitalisms of the West could not in the nature of things per- 
manently arrest their present decline. Hence, the capitalist 
point of view which is held by, for example, some sections of 
the British workers, and which at first sight does appear a for- 
midable obstacle to the success of communism in Britain, will 
disappear, is indeed now disappearing, with great rapidity. 
For the economic basis of imperial super-profits by which it has 
alone been possible for the British ruling class to maintain it, 
is now also in progressive disintegration. (One factor which 
tends to maintain the hold of the capitalists over the workers' 
brains, is the efforts of the social democratic functionaries, whose 
role it is to perform just this service to the governing class. 
Even they, however, will not indefinitely be able to make the 
bricks of a capitalist point of view in the workers' minds, with- 
out the straw of a share of capitalist super-profits in the workers' 
pockets.) 

We can now attempt a general estimate of the weight which 
should be attached to these three " fatal objections " to the 
success of communism in Great Britain. For while we have, it is 
submitted, shown the relative and temporary character of these 
objections, which the British capitalists naturally delude them- 
selves into supposing are absolute and eternal, we are not for a 
moment denying that they exist. What has been shown, it is 
suggested, is that all three objections, the objection that 
" Britain cannot feed herself," the objection of the overwhelm- 
ing power of the British capitalist class compared to the Russian 
capitalist class, and finally the objection of the capitalist psy- 
chology of the British workers, are all objections based on 
conditions which are more or less rapidly disappearing. A thing, 
however, must exist in order for it to be possible to disappear. 
Hence, these conditions certainly do to some extent exist to-day. 
We must ask, therefore, that most crucial and most difficult 



THE FUTURE OF GREAT BRITAIN 881 

question, which we posed earlier in these pages the quantita- 
tive question of " How long ? " How long for example will these 
objections to the success of communism in Britain persist to a 
significant degree ? 

He would be no better than a charlatan who would pretend 
to give any precise answer to such a question. It has been one 
of the arguments of these pages that the general trend of human 
development has at last come within the range of human cogni- 
tion : that we are at last beginning to know enough about the 
past to be able to produce the historic curve of events for a 
little distance into the future, with a margin of error not too 
great to make it useless to come to certain conclusions of a 
general character. (And there is no room for doubt that the 
refusal of all the theorists of the capitalist class to do so, has 
nothing whatever to do with the scientific caution which they 
profess, but is dependent upon the painful nature of the con- 
clusions to which any serious appraisal of the facts would drive 
them.) But this does not mean that our knowledge is yet 
adequate for any but broad and general conclusions about the 
future. 

Let us first give the fullest possible weight to the factors of 
strength in the capitalist position. There exists in Britain, no 
doubt, a certain tradition of social intercourse between the 
classes which, while it is in many respects markedly inferior to 
that of France or America, is very different from anything which 
was known in pre-war Russia or Germany. The long-continued 
expansion and the incomparable stability of British capitalism 
ever since 1850 have undoubtedly established traditions of class 
collaboration which are only gradually being broken down by 
the repeated shocks of the present governing class offensive 
against the workers. Such transitory, but still noticeable social 
phenomena as these allow the members of the British capitalist 
class, fixing their eyes resolutely on these purely local British 
conditions, to convince themselves that the communist position, 
while perhaps strong in theory, has no application to Britain. 
Conditions such as these allow those trusted allies of the British 
capitalists, the members of the British Labour party, to con- 
vince themselves that communist methods are useless for the 
purpose of appealing to British workers. And, in truth, if we 



882 THE COMING STRUGGLE FOR POWER 

concentrated our attention on the internal situation of Great 
Britain, on the balance of class forces within her shores ; on 
the present psychology of her workers ; on the abilities of 
her ruling class ; on the obstructive strength of her social 
democracy ; on the shifts and devices still open to all those 
who desire to maintain the rule of the capitalist class, we might 
be disposed to agree that the task before the British communist 
movement was very formidable, and that success must be long 
postponed. 

But to confine our appraisal to the internal situation, though 
it is a common error even amongst genuine sympathizers with 
the workers' cause, leads to an estimate of the prospects of 
British communism totally at variance with reality. For we 
must never forget for one moment that British communism 
is part of a world-wide movement, the successes, or failures, of 
any part of which quickly react upon the prospect of all its 
other parts : and that British capitalism is, to a degree un- 
paralleled by any other national capitalism, intertwined at a 
thousand vital points with the capitalism of the whole world. 
Thus, when we raise our eyes from our island, the shores of 
which have too often marked the limits of vision for British 
social theorists, the scene changes. If the British people were an 
independent isolated community inhabiting a little planet of 
their own (and yet, by some magical process, able to draw their 
present imperial tribute), then the rule of the British capitalists 
might not have reached by many years its inevitable term : by 
a mixture of class collaboration where that was possible, and of 
the unflinching repression of the workers (which British rulers 
have always known very well how to use when they had to) 
their days of privilege might have continued for some time yet. 

How different is the real situation. Britain is but an island 
in a sea which encompasses the whole world. No special provid- 
ence reserves for her a peculiar destiny. On the contrary, her 
immense imperial possessions, scattered in every quarter of the 
globe, make it certain that her fate will be especially dependent 
upon that of the rest of the world. And when we shift our ap- 
praisal to the prospects of communism and of capitalism on the 
world stage, a different picture presents itself to our eyes. Only 
in a few exceptional are&s do we find anything at all comparable 



THE FUTURE OF GREAT BRITAIN 888 

to the economic conditions which have allowed of the com- 
paratively pacific class relationships which we discover in 
Britain. On the contrary, we find in area after area of the 
earth's surface a political situation dissimilar to that of Britain. 
We find that in such areas the capitalist class has not now, nor 
ever has had, sufficient wealth to impose its outlook upon con- 
siderable sections of the workers ; that it has had neither the 
skill in collaboration nor the decision in repression, which has 
characterized the social policy of the British ruling class ; that 
a dozen different political complications have forbidden the 
capitalist classes of such areas to devote themselves to the task 
of controlling their workers ; that in many areas, as in the 
colonies of the great empires, the capitalist class is of another 
race and colour from the workers. 

Those possibilities of subtle and imperceptible social re-adjust- 
ments which seem so real in Britain are utterly out of the 
question in most of the rest of the world, and consequently 
communist theory and communist methods are the only ones 
which apply to the social conditions of nine-tenths of the in- 
habited globe. And if this is the case, then we may be assured 
that in a very short while they will apply also to such countries 
as Great Britain. Britain has her own history and consequently 
her own peculiar characteristics : but if we suppose that she 
will be allowed to work out her destiny in isolation, unaffected 
by the events which are unfolding themselves in the rest of the 
world, then we delude ourselves. The truth is rather that Britain 
is quite peculiarly vulnerable to the reactions of events which 
may take place at the other side of the globe. Her whole economy 
is based to an unparalleled degree upon profits drawn from the 
exploitation of her Empire. Colonial revolts already menace 
essential parts of her system. The social reactions which are 
bound to follow the crash of the high-piled pyramid of her super- 
profits, may well be especially violent and sudden. If communist 
theory and practice is the only possible policy for the working 
class of the world as a whole, then it is the only possible policy 
for the workers of Great Britain also. 



CHAPTEB XXI 
The Salvation of the British People 

IF British governing class opinion, in its restless search for 
reassurance, enormously overestimates the difference between 
the social conditions of Britain and those of the rest of the world, 
there is no need for us, on that account, to deny the individual 
and proper characteristics which Great Britain does possess. 
Nothing is more foolish than to deny the importance of such 
national characteristics. Lenin realized this truth very clearly, 
for he wrote that " the national and state differences now exist- 
ing between peoples and countries, will continue to exist for a 
very long time, even after the realization of the proletarian 
dictatorship on a world scale." " The abolition of national 
peculiarities is," he added, " at the present moment a foolish 
dream," 

And certainly the British, if only because they live in an 
island, have their full share of national peculiarities. Nor would 
it be natural if some of their own peculiar characteristics were 
not charged for them with a deep emotional content. For men 
form profound emotional ties with familiar surroundings ; with, 
above all, the surroundings which were theirs in childhood. And 
this is the drop of truth which lies at the bottom of that most 
horribly polluted of all wells : the well of patriotic emotion. 

Now it is often said, and more often felt, that communism 
necessarily flouts and outrages those deep emotions of personal 
identification with their nation which most men feel. It would 
indeed be a heavy handicap to communism if this were to be the 
case. Fortunately for the cause of the working class, the trutfi 
is very different. The truth, which, as the crisis in capitalism 
deepens will become inescapably apparent to everyone ; which 
will break through the most passionate efforts at suppression 
by the ruling class, is that it is capitalist imperialism which 
outrages, ravages and despoils the motherland of every race of 
men in turn ; and that it is communism alone which can bring 
national liberation to the peoples of the earth. We have but to 
glance either at the history of the last few decades, or at the 
present world situation, to substantiate both halves of this 



THE SALVATION OP THE BRITISH PEOPLE 880 

statement. Who can deny, for example, that capitalism is to-day 
trampling upon the patriotism of a dozen peoples ? It is true 
that at the same time it seeks to excite for its own purposes a 
horrible parody of patriotism, a repulsive spirit of jingoistic 
aggression, in the peoples of the great predatory empires. These 
empires, however, have no relation whatever to nationality. 
The Hindu is asked to fight and to die for the Petition of Right, 
and is assisted to do so by the Bengal Ordinances ; the Filipino 
must swear loyalty to the Declaration of Independence, lest he 
dream of separation from the United States ; and the Senegalee 
stands sentinel upon the ramparts of Metz, the better to enforce 
the immortal principles of 1789. But if capitalism attempts to 
whip up a jingo fervour in the nameless, shapeless conglomera- 
tions of nations and races which have been herded together to 
form the great empires of to-day, it has no answer but the bomb, 
the tank and the bayonet for the patriotism of subject peoples. 
If the children of Confucius show signs of succeeding in their 
hard task of recreating a united China, the imperialists of the 
world are quick to show them that the love of country is a 
characteristic to be stamped out by wholesale massacre, if it 
happens to interfere with capitalism's search for markets. 1 
Nor is patriotism always permissible even to white races. If 
Germany, for example, aspires ever again to be anything but 
a subject people her only hope of success, every French states- 
man of the last ten years has made it clear, is to resort to arms. 
And capitalism can never hope for respite from this desperate 
struggle with the forces of subject nationalism. For the very 
basis of modern capitalism, without which great empires, such 
as the British, could not exist for a single day, is super-profits 
derived from the exploitation of colonial and subject peoples. 

1 " Wholesale massacre " is the actual phrase used by the Shanghai corres- 
pondent of the London Times (who is warmly sympathetic to Japan) to describe 
what happened in Shanghai in January 1032. This journalist has a particularly 
clear view of the function which workers should perform in capitalist wars. Thus 
in his message of February 17th, 1032, he tells us that " intelligent elements " in 
China (i.e. Chinese capitalists) consider " that China has nothing to lose and 
much to gain by a policy of military resistance. . . . For this reason the Chinese 
are prepared to go on fighting and retiring indefinitely, losing little that matters 
much in this agricultural and over-populated country." Or again we can take the 
description of their own action by the Japanese capitalists themselves. Thus 
Admiral Shiozawa told the New York Times in an interview of Japan's " merciful 
intent" and promised "only two more days of indiscriminate bombing of 
civilians." 

AAP 



883 THE COMING STRUGGLE FOR POWER 

Let us never forget, moreover, the part played by love of 
country in the first great victory of communism : in the freeing 
of the soil of Russia from the invading expeditions of half the 
world. For it is hardly too much to say that it was the spectacle 
of the Russian courtiers, generals, landowners, capitalists and 
merchants, of the very men who had made patriotism their 
special monopoly, invading Russia in a desperate attempt to 
recover their profits, often at the head of foreign troops, and 
always using foreign bullets with which to shoot down their 
fellow countrymen, that finally rallied the overwhelming mass 
of the Russian people to fight for a communism which had 
become the cause of their national liberation. 

To-day we find the same process repeating itself in Germany. 
Side by side with the ever-growing revolt of the German workers 
against the German ruling class, there exists a mighty, if as yet 
deluded, revolt of all exploited Germans against the subjection of 
their fatherland to alien domination. This natural and just 
indignation has been canalized by the German fascists. But the 
very success of the Nazis is already on the point of exposing the 
hollo wness of the claim of Hitler and his lieutenants to be able 
to deliver Germany from her foreign exploiters. For Hitler's 
paymasters are, in fact, that group of German capitalists who 
demand a bigger compensation for themselves as the price of 
their co-operation with France and England in an anti-Soviet 
bloc. The Nazi movement is intended by them as an immense 
piece of chantage by means of which German capital may be re- 
admitted to participation in the markets of the world on equal 
terms. But they have no real intention of pushing matters to the 
point of a war of national liberation. (This, though, is not to deny 
the possibility of the Nazi rank and file getting out of hand.) 
Accordingly, as the time of Hitler's participation in the Govern- 
ment of Germany draws near, all his thundering menaces to the 
foreigners die away, as they needs must, at the sight of a French 
bayonet. They are replaced by the most banal appeals far less 
dignified, far more grovelling, than those of previous German 
Governments for a little respite from the stranglehold of 
Versailles. Sooner or later, this fact must become apparent to 
the German people : sooner rather than later they will learn the 
lesson that there is no possibility of German liberation from the 



THE SALVATION OF THE BRITISH PEOPLE 987 

foreign yoke 30 long as capitalism exists in the Reich. Then 
they will be shown by the undeniable evidence of events them- 
selves that it is the German communists, and the German com- 
munists alone, who can effect the national liberation of Germany. 
For they alone dare to invoke the only force which can shatter 
the Treaty of Versailles, the force of the workers united in 
struggle against international capitalism. 

Nor are these lessons, which Russia has taught, and Germany 
is teaching, without interest to us all. They seem to show that 
communism has often conquered, when it becomes apparent 
that the workers of any nation are the sole remaining force 
which can deliver their fatherland from the intolerable servitude 
which foreign capital imposes upon all subject peoples. By one of 
the most profound of those paradoxes with which the history of 
humanity abounds, communism, which is in essence interna- 
tional, finds a natural and powerful ally in the spirit of national 
liberation. Capitalism, still mouthing its jingo sentiments, sees 
itself wrecked at last by the love of country of simple men and 
women. 

Nor is the paradox difficult to understand. For capitalism in 
its early stage of development pushed the principle of political 
nationalism to its very limits. The cause of the self-determina- 
tion of all nations became, since this was the best method of 
destroying the semi-feudal empires, the cause of the capitalist 
class. The process reached its apogee with the Balkanization of 
Europe in 1919. Yet all the time that capitalism was politically 
splitting up the world into fragments, the economic necessities of 
large-scale mechanized production more and more required the 
welding of the world into vast economic units. Thus capitalism 
involves hypernationalist politics combined with supernational* 
economics. Capitalism is now carving the world up into great 
monopolistic empires, each with a ring of satellite petty States* 
And in doing so it must trample without so much as a thought on 
the national sentiments and loyalties of a hundred peoples. 
Communism, however, goes to work in an opposite manner. 
Just because communism recognizes the technical necessity 
of a complete internationalization of the economic life of the 
world : because it rejects utterly the capitalist attempt to cut 
up the world into warring imperial zones, because it leads the 



888 THE COMING STRUGGLE FOR POWER 

workers to the only possible solution, namely, a comprehensive 
world union of Soviet Republics : just because of this, commu- 
nism can, and does, dare to allow and indeed foster the most 
complete cultural, and educational nationalism. Communism 
is able to do so, because it can achieve the welfare of the workers 
of the industrial areas of the world, by their own productive 
power and not by the exploitation of the peoples of undeveloped 
areas. Here, again, we see that the welfare of different peoples 
is mutually compatible, while their power is not. Communism, 
thus, provides an objective basis for co-operation instead of 
conflict between the peoples of the world. 

Nor is this a mere theoretical claim. Even the most bitter 
enemies of the Soviet Union do not deny that its " national 
policies," the treatment, that is, of the former subject peoples 
of the Roman Empire, are one of its incontestable successes. 
Where the Tzarist empire had to repress, and that violently, 
a score of subject peoples, the Soviet Union has been able actually 
to encourage the national self-consciousness of every ethnic 
group within its borders. The culturally advanced Ukrainian, 
and the nomadic illiterate Uzbek are alike free to develop their 
national heritage, both of culture and of national resources, 
to the utmost possible limit. Nor has this been a matter of the 
mere freeing of these peoples from a burden of exploitation. 
Positive action of the most energetic kind has been taken to 
assist these peoples to make good their lack of economic develop- 
ment. Huge sums of money have been invested in providing the 
basis of local industries in these national republics. For it would 
be little use to talk of the liberation of national cultures, if the 
material basis for any kind of culture was not provided. It would 
be sheer hypocrisy to suggest that the Ukrainian or the Uzbek 
was " free " to develop his culture, if, in fact, a lack of industrial 
equipment meant that he had to toil sixteen hours a day. The 
liberation of Ukrainian culture, for example, will be effected 
quite as much by the power which is just beginning to flow from 
Dnieperstroy dam, as by the right to teach Ukrainian in the 
schools of Kiev. 

What has beset possible over a sixth of the world's surface will 
certainly be possible wherever the workers take power. A Soviet 
Germany, and a Soviet central Europe, can alone solve the 



THE SALVATION OF THE BRITISH PEOPLE 889 

problems of nationalism which are to-day dragging these an- 
cient centres of civilization back into barbarism. Western 
capitalism will founder on its inability to produce any solution 
for the national problems of Europe. Considerable elements from 
classes usually hostile to communism will be driven at the hour 
of crisis to support it, as the only hope of salvation for their 
fatherland. 1 

We see plainly this conjunction of the forces of communism 
and of nationalism in the case of colonial peoples such as the 
Chinese and the Bengalese ; or in the case of despoiled peoples 
such as the Germans. In these instances there is a conjunction 
of the revolt of the workers against the capitalist class and the 
revolt of subject nations, as a whole, against the predatory 
empires. And it is clear, that this conjunction of forces is first 
taking place, in these instances. But how, it may be asked, can 
such a coalition of the revolt of the workers, and of a movement 
of national salvation, take place in one of the great dominant 
empires of the world ? How can such a thing occur in Great 
Britain, for example ? There is no foreign capitalist class holding 
down the British people. No intolerable load of foreign debt 
hangs round their necks. Their capitalists are still on balance 
creditors, who can afford to dole out to them a pittance from 
their imperial tribute, not debtors compelled to demand that 
the British workers should starve in order to help them to meet 
their liabilities to foreign capital. All this has been hitherto of 
substantial truth : and it is another factor which accounts for 
the slowly developing consciousness of the working class in 
Britain. But in this case also we must put the question, how 
long will it remain true? For error itself is often a dying truth; 
and the truth of Britain's dominant position in the world is 
already sick unto death. The prospect of the conquest of Britain 
by a rival capitalist empire, of her reduction to the status of 

1 It must not be supposed that communists consider that the existence of 
separate national cultures, separate languages and the like, will be a feature of 
fully developed world communism. Such phenomena belong to the present, not 
to the ultimate, stage of human development. It is clear that man will in the end 
tire of the inconvenient idiosyncrasies of locality, and will wish to pool the 
cultural heritage of the human race in a world synthesis. Communism, however, 
recognizes that the path to such a world synthesis lies through the encouragement 
of the fullest development of those national cultures which capitalist imperialism 
seeks to repress. 



90 THfi COMING STRUGGLE #OR POWER 

a subject people, and the extortion from her of a Reparations 
tribute may seem remote. Yet there undeniably exists an imme- 
diate prospect of British imperialism being compelled to engage 
in a struggle, growing ever more desperate, at first with the 
forces of colonial revolt, and then with a rival empire, or with a 
coalition of rival empires, who will see their own growing strength 
mirrored in her growing weakness. 

The struggle of the British Empire against colonial revolt has 
indeed long ago begun. In India the effort at compromise, even 
with those not very uncompromising patriots the Indian capit- 
alists, has, for the moment at any rate, broken down. Britain 
is now relying upon two things alone in India : the high-explosive 
bomb and an alliance with extreme reactionary feudalists. 
Every Indian prince and rajah is now, it is clear, to be propped 
upon his throne by very little else than British bayonets and 
bombs. And that this is a conscious and well-thought out policy 
is made evident by the address of the British Viceroy, Lord 
Willingdon, to the Chamber of Indian Princes on March 28th, 
1982. Lord Willingdon defined his " duty as representing the 
Crown " to the Indian Princes, as follows : 

" The Viceroy," he said, " has the duty of maintaining 
to the States the absolute security of their rights and priv- 
ileges which have been assured to them under their treaties, 
sanads 9 and engagements, and, if necessity arises, to give 
protection to any ruler." 

This then is the new and frank definition of Britain's role in 
India. British high-explosives are to protect against thei* 
starving subjects the privileges and persons of some of the most 
decadent and extravagant tyrants left anywhere in the world. 
She is to maintain by the terror of the death-dealing inventions 
of the year 1932, the squalor, want, dirt, disease and injustice 
of the Europe of the year 1000, over areas almost as large. She 
is to support and encourage everything corrupt, rotten and out- 
worn ; to stifle, to extirpate with bomb and tank, everything 
young, growing, vital and progressive which shows itself any* 
where on the soil of India. 
* For only so can be maintained that exploitation of the Indian 



THE SALVATION OF THE BRITISH PEOPLE 8St 

Workers and peasants which forms the greatest part of the 
imperial tribute upon which British capitalism is to-day en* 
tirely dependent. We saw in previous chapters that British 
capitalism was turning towards an attempt to intensify its 
colonial exploitations at whatever risk. Hence, it must fight to 
the death against the growth of any forces in India, or in its 
other colonies, which might become capable of resisting ex- 
ploitation. Moreover, since British capitalism is now wholly 
dependent upon the exploitation of colonial peoples, the cause 
of the liberation of these peoples is identical with the cause of 
the British workers in their struggle for the overthrow of capit- 
alism. Their enslavement is maintained principally by means of 
the proceeds of the exploitation of the peasants and Workers 
of India. Their liberation is dependent upon the liberation of 
the colonial peoples. Again, the only possible solution for the 
problem of the relations between Britain and her subject peoples 
lies through the overthrow of British capitalism. Then, and not 
till then, the workers of Britain will be able genuinely to co- 
operate with the workers and peasants of India and Africa. 
A British Soviet regime, as one of the most advanced and in- 
dustrialized units in a growing federation of Soviet republics, 
will take its share, in economic co-operation with the workers 
and peasants of India and Africa in the same way in which the 
comparatively advanced districts of Russia proper are now 
co-operating with the former subject races of the Tzarist empire. 
Britain will be able to devote some of her immense productive 
resources to the export of capital goods of every kind to India 
and other undeveloped parts of the world, in return for imports 
which she needs. To-day, British capitalists draw their wealth 
from the exploitation of these areas. To-morrow, the British 
workers will find continuous employment, at the occupations 
at which they have unrivalled skill, in co-operating with the 
former subject peoples of all the capitalist empires, in the 
development of their own industries. 

British support for the Indian Princes is perhaps the most 
extreme case of the manner in which the British Empire is 
driven, by its need to screw up the process of exploitation, 
to rely solely upon the forces of reaction, and to fight desperately 
against all the forces of progress, everywhere in the world. (The 



892 THE COMING STRUGGLE FOR POWER 

British role in China has been and is exactly similar). If, the 
analysis of the world situation which we have submitted in 
earlier chapters has any validity, this process must grow more and 
more pronounced. An empire on the defensive must always find 
its allies amongst the friends of what is, or of what has been, 
all over the world. This is the immediate prospect which British 
imperialism holds out as a field for the exhibition of British 
patriotism. If we wish our country to become the universal 
agent of the force of black reaction, of superstition, of prejudice, 
of every old, possessing, frightened and reactionary class on 
earth, then we can feel that we are serving our country by serving 
her present rulers : but not otherwise. 

The repression of incipient colonial revolt is, as yet, a fairly 
simple matter. As yet, it is true, all that is asked of the British 
armed forces is to disperse a few frontier tribesmen round Pesha- 
war with well-aimed bombing attacks l : to shoot down a few 
of the more determined of the Congress supporters in Bombay : 
to send a few battalions to prevent that gentleman whom we 
knew in London as " Mr. A " and who is now the Maharajah 
of Kashmir, from being deposed by his subjects ; to round up 
a few helpless and starving savages in Burma ; or to provide 
a base, well protected by British cruisers and battalions, for 
Japan's " errand of mercy " by means of " only two days of 
indiscriminate bombing of civilians," in Shanghai. Such deeds 
as these will call forth in old-fashioned English men and women, 

1 The Peshawar correspondent of the London Observer gives us an account of 
the routine adopted by the British Air Force in India. In his message of April 10th, 
1082, he writes : " An account of how the R.A.F. carry out these bombing opera- 
tions is of interest. The pilots of the bombers each carry an aerial photograph of 
the country with the specified targets clearly marked on them. These photographs 
are about eight inches square, are very clear, and the target is marked with a 
circle. The bombing machines carry 230-lb. and 112-lb. bombs, and the fuses are 
d according to the nature of the target so that they penetrate before 
g. Twenty-pound bombs are also carried, and are used as * sighters.' 
ids are carried out by squadrons in a series of flights. These flights, which 
consist of three planes each, leave the base at half-hour intervals, so that not 
only is the bombing continuous, but the enemy cannot tell from which direction 
to expect the bombing nor the particular planes which are going to bomb next. 
During one day (the 4 1th) the R.A.F. from Kohat carried out more thafi two 
coiyjlcte squadron raids, and the planes from Risalpur completed three squadron 
raids, obtaining fcver seven tons of direct hits. It is interesting to note that some 
of these planes are the Hawker-Hart type, with which some of the squadrons of 
the R.A.F. are now being equipped. 

44 The aeroplanes carrying out these raids bombed their targets from a height 
of 8,000 ft., and the very good results obtained have once again proved the value 
of this arm of the Service." 



THE SALVATION OF THE BRITISH PEOPLE 898 

whose patriotism has not adapted itself to the needs of imperi- 
alism, a feeling of nausea rather than of pride. But admittedly 
they entail very little danger or risk to the British nation. Sooner 
or later, however, our imperialists will have to call on the 
British people to fight against very different enemies. Sooner 
rather than later, as we have sought to show, British imperialism, 
forced by its economic necessities to drive forward ever more 
strongly along the path of an exclusive, aggressive and violent 
policy, must come into collision with one of the other great 
empires of the world. Britain is at once the richest empire and 
the most vulnerable to attack. She is a huge treasure-ship, 
carrying an increasingly obsolete armament, sailing through an 
impoverished world. Such voyages have seldom ended well. 

The one alternative open to the British imperialists is to 
forestall the outbreak of war with a rival empire by leading a 
joint attack upon the Soviet Union. And it is certain that they 
will make a determined effort to palliate inter-imperial rivalries, 
sufficiently to make possible such a combined attack. It is im- 
possible to believe, however, that these rivalries can be suffic- 
iently appeased to secure a whole-hearted united front, even 
against Russia. The outbreak of war between, for example, 
Great Britain and Russia would certainly be used by other 
imperialist powers to encroach on British preserves. For the 
revolutionary action of the British workers which would cer- 
tainly challenge a British attack upon Russia from the outset, 
would reveal a condition of internal weakness, which would 
be extremely tempting to her enemies. In general, we may say 
that although the next world war will very probably begin by 
an attack on Russia, this attack will certainly be the signal for 
the outbreak of violence both within and between the other 
imperialist powers. 

In any event, there will then be no question of the bombing 
of helpless Indian tribesmen. If British imperialism is allowed 
to run its course, a war, the horror of which we know nothing, 
except that it will almost certainly exceed our wildest imaginings, 
will fall upon the British people. It would be a war in which, 
for the reasons which we have already discussed, the chances 
of victory for Britain would be small and remote. In any case, 
whatever the fortunes of war might be, it would be very 



894 im COMING STRUGGLE #O& POtVEtt 



improbable that at all a high percentage of the population of these 
islands would survive such a conflict. However formidable were 
the armed forces of Britain by sea, land and air (and they might 
well be very formidable), the position of the British civil popula- 
tion would be vulnerable in the extreme. They would be exposed 
to the double menace of repeated aerial bombardment with 
gas and incendiary bombs from bases upon the European 
continent, and to the still worse menace of the interruption of 
their food supplies, for it is most improbable that Britain would 
again be able to clear the seas of hostile warships and submarinSI, 
or the air above the sea of seaplanes. Even if resounding vic- 
tories were being won by British admirals and generals, British 
men and women would certainly be perishing wholesale, some 
by fire, some by gas, some by starvation. 

Moreover, is there much chance that the British governing 
class, marvellously adroit and intelligent as it still is for the 
purposes of politics, could produce leaders who would be suc- 
cessful in the extremely technical business of modern war? 
Even in the last war, when the degree of mechanization was 
incomparably lower, the anti-scientific, anti-theoretical type of 
mind .which is produced by the British public schools began to 
show grave defects. British officers had muddled through so often 
before that they supposed that they could muddle through the 
entrenchments on either bank of the Somme. Instead, they hung 
up the bodies of whole army corps of a whole generation 
of their fellow countrymen to rot on the German wire. In some 
respects, Britain has never yet recovered from the effects of that 
slaughter. How can there be any hope that she would survive 
the infinitely greater carnage towards which her imperialists 
are infallibly leading her ? There is only one thing which can 
possibly save her : there exists only one force which can draw 
her back from the abyss into which she seems foredoomed to 
plunge. And that is the organized force of her workers, awakened 
to the necessity of overthrowing once and for all the rule of 
tH$ capitalist class and taking power into their own hands. 

And So after all the question of national liberation and 
salvation, is raised no less acutely by the workers* struggle for 
power in Britain, than it is elsewhere. For which will exhibit 
a true love of his country, the Englishman who follows blindly 



THE SALVATION OF THE BRITISH PEOPLE 895 

tfrhere his present rulers are leading ; who follows them till they 
have taken his country to certain destruction, or he who joins 
with that advance guard of the British working class which had 
already realized that the only possible future for Britain is as 
a free Republic of an at first European, and later world wide, 
Union of Soviet Republics ? Such a future cannot indeed be 
assured without a struggle. In their struggle for communism, 
however, the workers of Britain will find trusty allies in the 
workers of all the world. Moreover, the amount of violence 
involved by even the greatest social upheavals, by the seizure 
of power by the French middle class in 1789, or by the Russian 
workers in 1917, has always been infinitesimal compared to the 
devastations of the wars of capitalism. 

It would be false to pretend that there was any path forward 
which could relieve the British workers of efforts and sacrifices. 
Theft choice is not between violence and peace. History has 
not even raised the possibility of universal harmony. And if 
the workers, misled by the disingenuous pacifism of social 
democracy, were to deny themselves the right to fight for their 
existence, they would find that all they had accomplished was 
to give free rein to the imperialists who will inevitably plunge 
the world into universal war. For if men hesitate before 
the task of achieving a new civilization ; if they draw back 
because no new order of society can be born without violent 
conflict, they will not achieve an epoch of peaceful stability. 
The alternative to the violence entailed by the lifting of human 
life to a new level is the violence entailed by the decline of human 
society, the break-up of such ^orld civilization as exists, the 
dawn of a new dark age of perpetual conflict. It is not given to 
men to stand still upon the path of history. Forward or back 
is their only alternative. Nor will either road be smooth. The 
road forward, however, is infinitely the less beset by violence 
and suffering. 

The sufferings, for example, which the workers will have to 
undergo in order to establish and maintain their rule in Britain, 
will be incomparably smaller than those which face them as the 
inevitable consequence of deciding once again to fight their 
masters 9 battles for them* And these are the sole alternatives 
before them. Instead of fighting, and that vainly, as they must 



896 THE COMING STRUGGLE FOR POWER 

if they remain under the leadership of their imperialists, to 
preserve all that is worst in the world, they will fight, if they 
fight for themselves, to secure a new epoch in the history of 
mankind. Their struggles will ensure that Britain takes a leading 
part, as befits her workers' high degree of development, in the 
establishment of communism, instead of playing the shameful 
role of the protectress of universal reaction. And the struggle for 
communism can surely be won by the workers of Britain, 
unshakably allied to the workers of all the world. There is 
no force on earth which can long prevent the workers of the 
world from building a new and stable civilization for themselves 
upon the basis of the common ownership of the means of pro- 
duction. Nor is there anything in the geographical, industrial, 
cultural, or economic position of Great Britain which forbids 
the British workers from taking a decisive part in the establish- 
ment of world communism. The realization of this new stage in 
the history of mankind is not in doubt. But the immediate 
future of all humanity rests to no small degree in the hands of 
the workers of Great Britain. 



THE END 



INDEX 



" A," MB., 892 

Acton, Lord, on historian's function, 

198n. 

American Civil Engineers, 180 
Amery, Mr. L. S., 284 
AngeU, Sir Norman, 78 sqq. 
Anti-Trust Laws, in U.S., 59-68 
Asquith pre-war Government, 804, 808 
Austrian Empire, 274-5 

BALDWIN, MR. S., 242, 818 

the present role of, 278 sqq. 
Beaverbrook, Lord, 242n., 248, 254n., 

276, 279, 281, 818 
Bell, Mr. Hesketh, 248n. 
Belloc, H., The Servile State, 251 sq., 

848-4 

Bentham, Jeremy, 80, 82, 289 
Bevin, Mr. E., 297, 822, 880n. 
Blackett, Sir B., 287 sqq. 
Briggs, Mr., 191 
British Association, the, 181 
Briining, Dr., 269n., 888 
Bukharin, N., on epistemology, 174n. 

on imperialism, 190, 192n. 
Burke, ., 26 

Butler, S., 179, 180 

CAIIXAUX, M., 176 

Capital, international movements of, 

7O-8, 121n. 
Capitalism, genetic description and 

definition of, 11-49 

implies a class-society, 48-9 

present characteristics and probable 
stability of, 58-151 

Capitalist crisis, characteristics of, 
88-91 

unstable money not cause of, 98-107 

true causes and possibility of cure 
of, according to J. M. Keynes' 
theory, 108-80 

Catholic Church, 15 sqq., 160 sqq., 

257 sq. 
China, 282, 291, 885, 889 

Kwangsi Soviets in, 870 
Christianity, in relation to social- 
economic history, 160 sqq. 

Churchill, Mr. W., 284, 876 

Citrine, Mr. W. M., 882, 886 

Clemenceau, M., 268 

Clergy of Newcastle, Inquiry Com- 
mittee of, 9O-1 

Clynes, Rt. Hon. J. R., 297, 817, 818, 
822 

Cobden, Richard, 82, 182 

Annual Lecture, 177 



Communism, prospects of in Great 

Britain, 860 sqq. 
Comte, A., 160n. 
Confucius, 282, 885 
Corporative State, the, 265 sqq. 
Cripps, K.C., the Hon. Sir S., 882 
Cromwell, O., 12, 19 

T., 12, 17 

Crown Colonies, the, 248, 277 

DANTON, 23 

Dennis, Lawrence, author of /* Capi- 
talism Doomed, 78, 149-50 

Dialectic, the Marxian, as hypothesis in 
social and historical theory, 21, 
80-1, 157-8, 17O-1, 175n., 198, 
202-4, 224-6, 881 

ditto in epistemology, 178-4, 174n. 
Diogenes, 140 

Disraeli, B., 191, 192 
Dominions, the Self-Governing, 244, 
277, 279 

EASTMAN, MAX, AUTHOR OF The 

Literary Mind, 218n. 
Electrical firms and scientific research, 

182 

Eliot, T. S., 218 sqq. 
Empire Free Trade, 242 sqq., 275 sqq. 
Enclosure Acts, the, 42 
Encyclopedistes, Les, H. G. Wells 

heir of, 187 
Engels, F., 227, 294 
44 Equilibrium economics," 188-4 

FAULKNER, W., AUTHOR OF Sanctuary, 

228n. 

Feudalism, 12 sqq., 86 
Finch, Judge, 21 
Five- Year Plan, the First, 197n. 

the Second, 854 

Food, emergency supplies of for G.B., 
869-71 

Ford, H., 85 

Fox, C. J., 27 

France, political relations to the other 
Continental nations, 291 

Franciscan Movement, the, 161 

Free exchange, doctrine of, lately re- 
vived _by 

French 

Freud, Dr. i 

The . 




172w. 
Fugger, M< 



808 



INDEX 



GABVIN, ME. J. I*, 282-8, 289 
George, Mr. Lloyd, .supplants Mr. 
Asquith, 211 

on Free Trade as great human and 
moral v issue, 288-9 

on danger of revolution in G.B., 
864 

George III, 12 

Germany, as a capitalist " weak spot," 

291 
God, on sale in later Middle Ages, 16 

source of " the idea " for Hegel, 225 
Graham, the late Rt. Hon. W., 817-18 
Greenwood, Rt. Hon. A., 832 

Grey, Lord, of the Reform Bill, 12, 29 

HALDANE, J. B. S., 185 

Hampden, J., 12, 19 

Handloom weavers, in early 19th 

century, 44 
Hawtrey, Mr. R. G., on Socialism, 11 

on Nationalism and Imperialism, in 
his Economic Aspects of Sovereignty, 
78-84, 192, 255, 277, 286, 851, 858 

Hayek, Dr. F. A. von, 94, lOOn., 
106n., 146n., 148 

on causation of crises and remedial 
possibilities, 114-30nn. 

Hegel, 178, 289, 844 

on the dialectic of history, 224r-5 
Henderson, Rt. Hon. A., 276, 297, 

809, 817, 822 
Herald, the Daily, 887 
Hessen, Professor, 175n. 
Hilferding, Heir R., 188, 241 
Hindenburg, Field-Marshal von, 882 
Historical Materialism. See Dialectic 
Hitler, Herr A., 276, 882, 876, 886-7 
Hobbes, T., 187, 875 
Holland, 28n. 
Housman, A. ., 217 
Huxley, A., 211 sqq., 251 

T. H., 176, 178 

IMPERIAL CHEMICAL INDUSTRIES LTD., 

64, 142 

Independent Labour Party, 869, 871n. 
India, 248, 277, 291, 890-8 
Industrial Revolution, the so-called 

English, 28-9 
International, Labour and Socialist 

(" Second"), 295, 828, 838 

Third," 870 

International trusts, as means to 
world-peace, 84-7 

JANSENIST MOVEMENT, 161 
Japan, 278, 282, ct passim. 
Jefferson, 12, 149 
Joyce, James, 221 sqq. 
Jung, Dr. C. S., 197 



KADTSKY, HEBB It,; 188, 855 
Keynes, Mr, J. M., on functions and 
possible reform of money, 94-X07 

on causation of crises, 108-14, 196 

on possible methods of avoiding 
crises, 114-80, 288 

views as social and political theorist 
examined, 200 sqq. 

King, H.M. the, 280 
Kipling, R., 191 
Kitson, Mr. A., 287 
Knox, Phillander B., 194 
Kreuger, M. Ivar, 85 

LABOUR MARKET, ESTABLISHMENT OF 

THE, 89-46 
Labour party, British, 276 sqq. See 

also Social Democracy 
Lancashire, in later 18th century, 29 

in I860, 88 

in 19th century and to-day, 150 

in post-war years, 285 

Cotton Corporation, 286 
Laski, Professor H. J., 194n. 

his Communism ref., 869n. 
Lawrence, D. H., 209 sqq. 
Lenin, N., 854, 855, 868 

on feudalism, 156 

on social basis of religion, 167n. 

on H. G. Wells, 188 

on G. B. Shaw, 200 

on Tolstoy, 216n. 

on Imperialism, 190, 192, 281 sqq. 

on Social Democracy, 294 

his Left- Wing Communism quoted, 
850, 360-1, 884 

Locke, John, 12, 23n., 24, 26, 187 

MACDONALD, RT. HON. J. RAMSAY, 

276 sqq., 297, 303-4, 308 sqq., 829 
MacMillan, Capt. H., 240-1 

Report, 73 

Malinowski, Professor B., 170n. 

Manchuria, 86 

Marx, K., 180n., 186n., 178, 190, 294 

on religion, 159n., 160, 169, 171 

on epistemology, 174n. 

on dialectic of history, 224 

on " primary " and " final " stages 
of communism, 342 

on bourgeois recruits to the working- 
class, 877 

Materialist Conception of History. See 

Dialectic 

Mellon, Mr. A., 62-8, 142 
Mill, J. S., 187 
Minority Government, salvation of 

Social Democracy, 802-5 
* Mond-Turner " negotiations, 886 
Money, origin and nature of, 91-8 

changes in value of, 98-107 



INDEX 



899 



Money, proposed ** tabular," 108 sqq. 
Morgan, Messrs. J. P., 62-8, 142 
Morrison, Rt. Hon. H., 882 
Mosley, Sir O., Bart., 284 
Mussolini, Signer B., 265 sqq., 876 

NAPOLEON, 24-8 

National Government, British, 278 sqq. 
Nationalism, measures of economic, 
68-78 

deplored by English Liberals, 74 

logical consequence of monopoly, 
75-8, 284 sqq. 

and prospects of communism in 
various countries, 884 sqq. 

forms and treatment of in U.S.S.R., 
888-0 

Nature, 177 sqq. 

" Nazi " party, the, 264 sqq., 886-7 

Newton, I., 175n. 

Nietzsche, F., 228 sqq. 

Norman, Mr. Montagu, 122, 874 

PAINE, T., 12 

Pitt, W., 27n., 204 

Planning, capitalist, economic or " na- 
tional," 131, 186, 286 sqq. 

Price-system, the, 87-8 

Protestantism, in the Reformation, 
16-19, 160 

Proust, M., 207 sqq. 

REBELLION (1640) AND REVOLUTION 

(1688), ENGLISH, 10-22 
Reform Bill, the Great, 20 
Reformation, the, 12 sqq. 
Richelieu, Cardinal, 20 
Robbins, Professor L., 132n. 
Robertson, Mr. D. H., 04, 146n. 
Robespierre, 160n. 
Rockefeller, J. D., and family, 58, 62, 

142, 248 

Roosevelt, President, 50, 108, 104 
Rousseau, J.-J., 48 
Runciman, Mr. W., 66n., 280 

SALTER, SIR A., AUTHOR OF Recovery, 
58-0, 72n., 78, 85n., OOn., 180n., 134, 
144n., 146w., 287w. 

Samuel, Sir H., 280, 817 



Seaham Harbour, 810 

Shaw, G. B., The Apple Cart, 181 

his development examined. 100-200 
Siegfried, M. Andre, 148-0 

Simon, Sir J., 280 

Smith, Adam, 12, 24n. 

Smuts, General, 181 

Snowden, Lord, 280, 207, 800, 816-17, 
822, 820 

Social Democracy, in theory and prac- 
tice, 208 sqq. 

" Social Services," the British, 144-5, 
805-6 

Spengler, O., 180n. 

Stalin, J., 354 

Stamp, Sir J., 237 

State-monopolies, in G.B., 64 

in Germany, 64-5 
Stendhal, Rouge et Noir, 25n. 

THOMAS AQUINAS, SAINT, 30 

neo-Thomism, 161 

Thomas, Rt. Hon. J. H., 800, 818, 

316-17, 384 

Trade Union Movement, British, 800-1 
Trevelyan, Professor G. M., 21 
Trotsky, L., on H. G. Wells, 188 

UNILEVER LTD., 64, 142, 183 

Ure, Dr. N., 175, 177 

U.S.A., 244, 275, 278, 287, et passim. 

U.S.S.R., 244, 275, 287, 201-2, 844n., 

354 sqq. 
Usury, successive views of Church on, 

18 

VERSAILLES, TREATY OF, 182, 387 

WASHINGTON, G., 12, 140 
Waugh, Evelyn, 223n. 
Week-End Review, the, 287 
Wellington, Duke of, 27 sqq. 
Wells, H. G., 53, 165, 232 

his recent development examined, 
186 sqq. 

Willingdon, Lord, 800 
Wilson, Edmund, author of Axel's 
Castle, 200 

YOUNG, OWEN D., 61